Guwahati Munciipal Corporation gets BB credit rating


Guwahati: The Guwahati Municipal Corporation has clinched a poor "BB" rating on its credit report card, implying a little blot on the organisation's financial resume.
The rating is meant to help financial institutions appraise GMC's strengths and weaknesses before considering an investment.
Fitch Ratings - a credit rating agency - put its seal on the score, going by GMC's weak institutional and technical capabilities and frail "cost recovery" policies.
According to Fitch, a BB rating signifies that payment of financial commitments is uncertain to some degree and the capacity for timely repayment remains more vulnerable to adverse economic changes over time.
The report says that GMC has also been slow in implementation of reforms in comparison to other Jawaharlal Nehru National Urban Renewal Mission cities.
The report said given GMC's lack of technical and institutional capacity, the state government has directed the Guwahati Metropolitan Development Authority to undertake the implementation of the urban renewal mission, including water supply, sewerage and sanitation.
"On the project front, there has been a considerable delay in completion. The physical completion for the projects is below 50 per cent and the impact of cost overrun has been phenomenal for solid waste management project and for procurement of buses," a source said.
Sources said there have already been many concerns raised on the solid waste management services being provided in the city.
On the financial front, the agency says that the corporation has no debt, nor is there any likelihood that it will incur debt in the medium-term, as the entire capital expenditure is being borne by the government.
"This places GMC in an advantageous position, as it gives it the chance to generate revenue without having to plan for capital investments," it says.
Giving details, the report said barring 2007, the corporation maintained surplus revenue, which increased substantially in 2009 and 2010  because of a sudden increase in grants contribution and subsidies from the state government.
On revenue expenditure, barring 2006, the corporation has shown a consistent increase which was mainly on account of establishment expenses, which formed an average of 65.9 per cent of the total revenue expenditure.
Revision of salaries of GMC employees on the lines of the recommendations of the Sixth Pay Commission came into force in March last year and the salary arrears from January 2006 to February 2010 were paid in two instalments.
Under the Basic Services for Urban Poor mission, 2,260 houses have been sanctioned for the urban poor, for which work has already begun.
Of these, 352 houses are ready, and the remaining are expected to be completed by October.
It says that the city has a reasonably well-developed commercial profile, with a number of small and medium-sized agriculture-based industries and is the only municipal corporation in the state to receive a large proportion of assistance from the government.


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