City Corporate & Business Plan - Municipal

Chapter ñ 14 Final Report: Ambur Municipality
The FOP is a cash flow stream of the ULB based on the regular Municipality
revenues, expenditures and applicability of surplus funds to support project
sustainability. The FOP horizon is determined to assess the impact of full debt
servicing liability resulting from the borrowings to meet the identified interventions.
The proposed capital investments are phased over 5 years investment from FY 2009-
10 to FY 2013-14.
The full project investment scenario is based on all the proposed investments
identified for Thirupathur Municipality and the requirement for upgrading the townís
infrastructure is estimated and phased based on the construction activity.
Implications of this investment in terms of external borrowings required, resultant
debt service commitment and additional operation and maintenance expenditure
are worked out to ascertain sub-project cash flows. Revenue surpluses of the
existing operations are applied to the sub-project cash flows emerging from full
project investments ñ the Municipality fund net surpluses indicates the ULBís ability to
sustain full investments.
FY 2009-10 is taken as the base year and FY 2028-29 is assumed as the reference
year (20 years) to determine the net surpluses and whether the Municipality
maintains a debt / revenue surplus ratio as an indication of the ULBís ability to
sustain investments.
14.5 BASIC ASSUMPTIONS FOR PROJECTIONS :
The FOP is based on a whole range of assumptions related to income and
expenditure. These are critical to ascertain the investment sustenance and would
also provide a tool to test certain specific policy decisions regarding revenue and
expenditure drivers on the overall Municipality fiscal situation. This section
elucidated the key assumptions adopted for the FOP scenario.
The growth rates for the various heads of income and expenditure have been
arrived based on the past growth rates and the future estimated population growth.
Improvements to the existing current and arrears collection percentages have been
assumed for the various revenues directly collected by the Municipality, which
implies that the Municipality would have to improve its collection mechanism to
sustain full investments.
Given below are the various assumptions forming part of the FOP workings :
14.5.1 Property Tax
The population of Ambur Municipality is estimated to grow at around 1.35% p.a.
Based on the same Property Tax Revenue are assumed to increase @ 1.35% per
annum. The last revision of Property Tax was carried out on 1-10-98 and it is assumed
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