The reserve corpus is largely deposited in fixed deposits in multiple banks, and the interest earned contributes to the revenue of the civic body.

In recent years, the BMC has taken up capital-intensive infrastructure projects such as the coastal highway, the Goregaon-Mulund Link Road (GMLR), the Wastewater Treatment Facility Project (WWTF), involving the construction of seven wastewater treatment plants (STPs), and the mega road concretization project.

Civic officials said the total expenditure on all major infrastructure projects now exceeds Rs 1.5 lakh crore, almost double the size of the BMC’s current reserve corpus.

Apart from this, Rs 51 of the total reserves, held as fixed deposits, are earmarked for internal commitments. These include funds set aside for employee gratuities, pensions, Provident Fund contributions and repayable bank guarantees taken from contractors as security deposits, which have to be returned on completion of projects.

“As we can see, of the Rs 81,000 crore reserve we have, only 49 per cent or Rs 39,500 crore could be used for infrastructure projects, while the total size of these projects is almost four times this usable amount. This clearly indicates that in the coming years there will be a liquidity crisis in the BMC,” a civic official said on condition of anonymity.

BMC commissioner presents civic budget in February. Last year’s budget amounted to Rs 74,527 crore, of which 58 percent or Rs 43,000 crore was earmarked for capital expenditure, largely for infrastructure works.

“Last year, the budget showed no signs of financial crisis, this year we were also able to manage the decline as our property tax generation increased and the premiums obtained through the construction proposal department also increased. However, if full attention is not paid to controlling expenditure and fixing liabilities, things will slowly go out of control,” the official added.

Return of corporations, subsidies.

The return of corporates and the subsidy promises in the Mahayuti manifesto are expected to further increase the BMC’s spending. Among the most criticized proposals is the plan to subsidize bus tickets for women by 50 percent.

At present, Brihanmumbai Electric Supply and Transport (BEST) relies heavily on subsidies from the BMC. Last year, the civic body allocated Rs 1,000 crore to BEST, compared to Rs 850 crore the previous year.

BEST’s records show that in the current financial year, its total financial liabilities stood at Rs 9,286 crore, while the annual deficit is Rs 2,200 crore.

In May 2024, the minimum fare for non-air-conditioned buses was increased from Rs 5 to Rs 10, while the minimum fare for air-conditioned buses was increased from Rs 6 to Rs 12. This led to an increase in BEST’s daily revenue margin from Rs 2.5 crore to Rs 3.5 crore.

“If subsidies are boosted, then daily revenue would see a 40 per cent drop from Rs 1.4 crore daily, which means an annual loss of Rs 511 crore for the company,” a BEST official told The indian express.

The Mahayuti manifesto also promised to stop the 8 percent annual increase in water tax for the next five years.

Currently, the BMC charges Rs 6 per 1,000 liters for residential water supply and Rs 50 per 1,000 liters for commercial and industrial use. In 2013, the standing committee approved a policy allowing annual tariff increases of up to 8 percent. However, no increase has been implemented since 2023, despite the fact that the cost of water supply increased by 20 percent. The last increase in 2022 was 7.12 percent.

“The BMC supplies water for 3.87 billion liters per day (MLD) at a very nominal rate and the supply cost is almost two times the tax. Therefore, if the rates are not increased further, there will be a loss of at least Rs 200 crore annually,” an official said.

Furthermore, the return of companies will lead to an increase in fixed expenses of Rs 1,931.6 million per year for the next five years, in the form of salaries and development funds.

The civic administration pays a monthly salary of Rs 25,000 to each of the 237 elected and nominated corporators. Each corporator also receives an annual development fund of Rs 1.6 crore for works in their respective constituencies. These funds have not been used for the last four years due to the absence of an elected body.

“The Mumbai Municipal Corporation (MMC) Act states that salaries and development funds will have to be given to the corporations compulsorily. Therefore, this is a fixed expenditure that the BMC will incur for the next five years. Till 2022, the BMC did not have the pressure to take up so many major infrastructure projects at the same time. However, the situation is different now and the BMC will have to adjust its expenditure,” the official added.

Support funds

To regulate spending while executing big-ticket infrastructure projects, the BMC has increasingly resorted to the Public Private Partnership (PPP) model. Under this approach, private companies are being forced not only to invest in projects but also to maintain them for a fixed period after their completion.

An example is the development of a 70 hectare open space along the coastal highway. Of this, the BMC has developed a 11-hectare Marine Drive-like promenade, while the remaining area is being developed by private agencies. Reliance Industries Limited (RIL) is developing about 53 hectares, while dad Sons Limited is beautifying five hectares, including the road median.

In recent months, the civic body has also floated Expressions of Interest for PPP partnerships for projects such as the Rs 1,250-crore overhaul of the Deonar slaughterhouse, Asia’s largest slaughterhouse, and a textile museum at Kalachowki in Byculla, estimated to cost between Rs 80-100 crore. Earlier in 2025, the BMC also proposed privatizing services like cardiology, dialysis and blood banks in at least six peripheral civic hospitals under the PPP model, drawing criticism from several organisations.

Officials said the intention behind PPP projects is not only to reduce pressure on civic finances but also to generate additional revenue, as in the case of parking projects where private operators share a portion of their profits with the BMC.