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Our PM handed over a cheque of Rs.400 crores towards the Brihanmumbai Storm Water Drain project. (We, the SMS generation can call it BRIMSTOWAD). The 400 crores is the first installment of the Rs. 1800 crore project. Mumbai’s first citizen, Mayor Dr. Shubha Raul, was not too happy though. On a radio interview she sounded very put off and said that she expected atleast 25% of the annual 96,000 crores that it pays the center through various forms of taxes collected in Mumbai.
Now let’s look at it in a very corporate ishtyle. There are cost centers and then there are profit centers. The profit centers, in this case Mumbai, fund the cost centers, like defense, public amenities,education etc. The company executives have to ensure that the profit center work smoothly to support it’s expenses. My paper napkin calculations tell me that India would loose 21 crores tax rupees each time Mumbai shuts down due to water logging. To put that loss into perspective, 21 263 crores could fund 26,250 328,750 children’s annual education cost by CRY. So with my weird logic, every time there are heavy rains in Mumbai, the trains don’t work and office have to remain closed, 26,250 328,750 children lose a education for a year.
So then now is it wrong for Mumbai to demand so much?
by Aditya | on Monday, September 3rd, 2007 at 1:40 am | 
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September 3rd, 2007 at 10:48 pm reply
I’m sure the intention of the author was spot on and I grant him that. Just a few points though..
1. BRIMSTOWAD is known as that not just by the SMS generation but also by the press, politicians and bureaucrats. Isn’t that better than keeping on referring to it as “Brihanmumbai Storm Water Drainage”?
2. I’d appreciate it if you could give me some more details on the number of Rs96,000crores that the Mayor quotes as taxes paid by Mumbai. If the logic is that Mumbai earns these taxes within the city (and hence it is entitled to a higher share of funds to improve it), then I’m not sure I agree with it. A lot of companies have their plants and manufacturing facilities located outside of Mumbai, but since they’re HQed in Mumbai, I’m guessing their taxes are counted in that Rs96,000crores number.
3. The Mayor is the head of the BMC - Mumbai’s administrative body responsible for the daily maintenance of the city (and much more). Now, I’m sure you know that the BMC’s annual budget runs into thousands of crores (I think its about Rs9,000crores), which is more than the GDP of some small countries. On a broader basis, Mumbai is looked after its corporators (the people who run BMC), its MLAs and its MPs. All these kind gents and ladies are people we’ve elected to their position. What have they done for Mumbai lately? For example, has the Chief Minister of Maharashtra repealed the ULCA, something which is necessary for us to get access to funds that the Centre provides under the JNNURM?
4. I’m not sure how you did your paper napkin calculation and I’d appreciate it if you can explain. But I’m guessing that if Mumbai is all water-logged and shut down, Mahindra’s Nashik plant will still make tractors and Scorpios. How does that add up in your Rs21crore/day number?
My points
1. Lets first get compliance and responsibility of our own elected people in our own city before knocking at the doors of the Centre.
2. If the Hon. Mayor believes that the amount is too little, perhaps she should first check up on the implementation of Mumbai’s Budget. Surely a city that “pays so much in taxes to India” can keep up with maintaining itself and taking it care of itself rather than keep running to the Government time and again?
3. And if we’re talking Corporate ishtyle, perhaps the BMC can raise municipal bonds if it feels the need to raise extra funds? Surely all global investors would want a piece of the action in India’s most tax-paying city?
Sorry for the long-winded comment.
Patrix - haven’t been to your blog in a while after feed subscription. My best wishes to you and Ash for the wedding. All the best dude!
September 4th, 2007 at 1:27 am reply
Bombay Addict,
BRIMSTOWAD is much better and cooler than the actual long form name.
now for the information that you wanted, The 96000 crores figure quoted by all the dailies, report this amount to be in the form of direct taxes which includes income tax, capital gains tax etc..
the 21 crores is just a plain division of 96000 by the number of days in a year. so its that simplistic. So you can debate that the figure could be a bit misleading but lets keep it simple for now.
Well, the point that the mayor tries to make is probably that the income tax percentage in the whole taxation system is so high that the local taxes are just not enough to keep mumbai upto date.
Your point about self assessment stands undisputed
September 4th, 2007 at 3:37 am reply
Well that makes all of us cool on Brimstowad then.
That Rs96,000crores is just direct taxation? Whoa. Wonder what’ll happen if they include octroi.
And isn’t Rs96,000crores/365=Rs263crores per day? Not sure if I got that right. Appreciate your help again.
September 4th, 2007 at 9:34 am reply
oops.. silly mistakes. But it only further enforces the mayor’s case.
doesn’t it?
September 4th, 2007 at 8:37 pm reply
Direct taxes include corporate taxes, don’t they. One cannot account for all these corporate taxes as coming only from Mumbai, so the 96,000 crores figure can take a major hit.
A simple calculation:
Mumbai’s population:- ~ 2 crores
Tax paying populace:- 10% = 20 lakhs.
If all taxes are paid by individuals and not corporates, tax per person = 96,000 crores / 20 lakhs = 4,80,000 per individual. Sounds way too high to me.
As mentioned in a comment, Mumbai’s upkeep can be carried our comfortably with the 9,000 crores received by the city’s govt. Someone with some time on hand should file a RTI application to see how this fund is distributed. I would not be surprised if most of it goes as salaries of the BMC employees.