Chandigarh admn wants ₹238 crore saved from privatising power for needy MC

In a ray of hope for the severely cash-strapped municipal corporation, the Chandigarh administration has written a letter to the Union ministry of home affairs (MHA), seeking ₹238 crore recurring savings resulting from UT electricity department’s privatisation that will further be redirected to the civic body.

In the letter, the UT finance secretary highlighted the major milestone achieved with the privatisation of the city’s electricity department, a move which led to a significant reduction in recurring expenditure — estimated at ₹238 crore — through reduction in salaries, wages, maintenance costs and commercial losses.

Recurring savings reflect the money saved every financial year, not just once.

The letter came after mayor Harpreet Kaur Babla and municipal chief Amit Kumar raised multiple requests to UT administrator Gulab Chand Kataria to allocate additional funds to MC for ensuring its smooth functioning.

“It is proposed that the ₹238 crore recurring savings from power privatisation be allocated to the Chandigarh administration on a recurring basis as additional funds over and above the regular increase in budgetary allocation to help alleviate the financial crisis of MC and meeting our arrears of committed liabilities,” the letter read, adding that the proposal will also be submitted as part of the first batch of supplementary demands for grants for financial year 2025-26.

The administration clarified that they had projected a total fund requirement of ₹27,924.58 crore for the current financial year, but the Union government approved a budgetary allocation of only ₹76,983.18 crore, leading to a significant shortfall of ₹7,941.40 crore.

“In view of the reduced budgetary grant, the UT administration provided grant-in-aid to MC to the tune of ₹560 crore for 2024-25 and ₹625.00 crore for 2025-26. But the committed liabilities of the civic body, including salary, wages, pensions, NPS contributions, fuel, electricity, water and other essential services, amount to ₹960 crore for 2025-26,” the letter explained.

The acute financial constraints are affecting the execution and continuity of essential civic services, the letter further pointed out.

“MC is lagging behind in several key infrastructure and service delivery projects, including solid waste management, door-to-door segregated waste collection, operations of garbage transfer station-cum-material recovery facility, liquid waste management, sludge management, horticulture waste management, re-carpeting of V3, V4, V5 and V6 roads, maintenance of green belts, fire-fighting services and maintenance of street lights,” the administration explained to the MHA.

Only ₹73 crore have been spent in 2024-25 against ₹467 crore projected in MC’s annual budget, the officer further said, highlighting how limited financial resources continue to pose a significant challenge to the timely execution and expansion of these essential projects.

MC running on empty

MC has been reeling under an acute financial shortfall. In the absence of funds, no fresh development tenders have been floated since May last year, effectively bringing the city’s growth to a standstill. The annual deficit has also left it struggling to meet its committed liabilities, including salaries, pensions, water and electricity bills, maintenance works and fuel expenses.

While MC remains hopeful of additional funding from the UT administration, no concrete support has materialised so far.

MC’s repeated requests of additional meetings have only resulted in the UT administrator asking it to cut down its own expenses and increase revenue from its own sources.

During the mayoral polls on January 30, following Harpreet Kaur Babla’s victory, BJP’s city president Jatinder Pal Malhotra had announced a special grant of ₹92 crore by the Centre for MC. However, it has yet to become a reality.