Chennai Corporation is grappling with a severe financial crunch, to the extent that it is struggling to disburse monthly salaries to its employees. Officials attribute the situation to heavy capital spending in previous years and say it could take up to six months for finances to stabilise.
The civic body has been executing multiple infrastructure projects through private agencies, including stormwater drains, road relaying, school buildings and solid waste management. For these works, it has borrowed over Rs 2,000 crore from lenders such as the Asian Development Bank, the German development bank and the World Bank, paying about Rs 95.20 crore annually as interest.
At the same time, the Corporation’s recurring commitments remain high, with around Rs 2,437.40 crore spent annually on salaries and pensions. It also incurs administrative expenses of about Rs 328.21 crore and spends roughly Rs 2,232.70 crore on maintenance and related works. Officials said inadequate fund flow from the Centre and the State has worsened the cash position.
Amid the crunch, the Corporation has cancelled contracts worth over Rs 800 crore, including the Velachery flyover work that was awarded in the final days of the earlier DMK regime, according to officials. It also has pending payments of about Rs 2,000 crore to contractors for completed works, and departments have been instructed not to start new projects for now.
To shore up revenue, the Corporation has stepped up property tax collection, including door-to-door drives and extended collection hours from 8 am to 6 pm. Zonal officials have been directed to ensure weekly property tax collections of Rs 300 crore, while efforts are also being intensified to collect rents from Corporation-owned commercial complexes. Until finances improve, priority will be given to works such as dedicated routes for schoolchildren’s safety, correcting accident-prone road curves and restoring waterbodies to reduce flood impacts; contractor dues will be cleared once the situation stabilises.
