The Hindu : Front Page : Funds an area of concern for Corporation

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Monday, May 05, 2008
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Funds an area of concern for Corporation

K.V. Prasad

File Photo: S. Siva Saravanan

For schemes: The Coimbatore Corporation is likely to obtain loans from lending agencies. –

COIMBATORE: Yet another effort of the Coimbatore Corporation to find funds for major infrastructure schemes has hit a roadblock.

Its hopes of better revenue through increased Property Tax rates have been dashed by opposition from political parties in the Corporation Council. The Corporation has embarked on implementing schemes for Rs. 3,186 crore under the Central Government’s programme, Jawaharlal Nehru National Urban Renewal Mission.

The civic body will get 50 per cent of the cost of schemes funded by the Central Government in the form of grants. But, as per the mission guidelines, the Corporation has to fork out 30 per cent of the cost of more than 10 projects.

Already, the civic body is at a disadvantage as the State Government will provide the balance 20 per cent of the project cost as interest-free loans and not grants.

Now, it has to obtain loans from international and national lending agencies for the 30 per cent cost. Apart from arranging funds to repay the principal and the interest for this part, the Corporation will be saddled with the task of raising revenue to repay the interest-free loan the Government will give.

The Corporation has said in its budget this year that it expects Rs.83 crore as revenue from Property Tax in the event of a revision, as against the Rs.42 crore annual target for the last 10 years. This has run into uncertainty now.

Official sources say that rising cost of construction materials has already hit routine works. Now, there is the possibility of cost escalation in major projects.

The sewers project has already been cleared at Rs.377 crore and the water scheme at Rs.113 crore. The Corporation has already raised drinking water charges and introduced a monthly sewers maintenance charge of Rs.170. These and the tax revision have run into stiff resistance from Opposition parties. Consequently, the tax revision has been put on hold.

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