Bengaluru’s civic agencies are not financially well-governed, and their balance-sheets are a colossal mess.

news Governance Thursday, June 23, 2016 - 17:16

If you are a Bengaluru resident, you don’t have to read the newspapers to know what a mess the city’s civic agencies are in, you just need to look around. The roads are a mess, the garbage is all over, leaky pipes are in every corner and the drainage system is far from being complete.

We assume that all of this is just corruption and general operational inefficiency. All of that is true – but a special report by Janaagraha now exposes the shoddy financial management in government’s civic agencies in the city. You would quickly assume that this is about the Bruhat Bengaluru Mahanagara Palike, but isn’t. It is true that the BBMP has a financial mess of its own, but there are other agencies like the transport department, water and sewerage board and the development authority which could be squandering our hard-earned money.

An analysis by Janaagraha by measuring the quality of financial management at Bengaluru Metropolitan Transport Corporation, Bangalore Water Supply and Sewerage Board and Bangalore Development Authority shows that Bengaluru’s civic agencies are not financially well-governed and this is impacting their ability to raise adequate funds and use such funds efficiently to meet their service obligations.  The analysis reveals that on a scale of 0 to 15, BMTC, BWSSB and BDA score in a range of 4-6, all less than 50%.

Here are 5 charts which show how bad their financial management really is.

1. Civic agencies in the city have presented unrealistic budgets over the years. The difference between the actual budget of the agency (Budget) and how much they really spend (Actual), is quite high. The difference between the budget and actual spending (Variance) was as high as 87% in the BDA in 2011-12.

2. Each time an organization is audited, the auditors record adverse observations. Even one adverse comment from the auditor is considered a huge taint by multinational companies. An analysis of the audit reports of these three agencies show that there are several adverse audit observations in the audit reports of civic agencies. BWSSB has not completed the audit of annual accounts for 2014-15; BDA has not completed its audit of annual accounts for 2013-14 and 2014-15

3. There are huge losses in the agencies too. BMTC and BWSSB recorded losses in 2014-15, with the BWSSB’s loss exceeding Rs 340 Cr on an income base of Rs 878 Cr. Given the scale of water supply and sewerage challenges in Bengaluru, BWSSB’s financial performance is worrisome.

This means the financial sustainability of civic agencies needs to be reviewed regularly.

4. Janaagraha also says that poor cash management and debt management may well be a drain on the taxpayer. BWSSB’s huge outstanding loan balance is resulting in interest outgo of over Rs 300 Cr a year, whereas BDA has a significant cash surplus.

The report was produced by Janaagraha's Srikanth Viswanathan, Bharathy Jayaprakash and Kartika Nair.