Chennai urban planning body CMDA runs out of cash for the 1st time in its 5-yr history, seeks govt aid

The reason behind current financial situation is that CMDA ventured into construction which otherwise should have been undertaken by local bodies, says a CMDA official.

CMDA relies primarily on planning permission fees & other internal revenues. | CMDA website

Chennai: The Chennai Metropolitan Development Authority (CMDA), which operates as a self-sustaining urban planning body, has run out of cash for the first time in its over five-decade history, and has formally sought financial assistance from the Tamil Nadu government.

The authority has requested around Rs 200 crore in aid and grants to address immediate operational needs, including salaries and pending dues, amid mounting liabilities, estimated at Rs 3,500 crore. 

The CMDA serves as the nodal urban planning agency for the Chennai Metropolitan Area encompassing parts of Chennai, Thiruvallur, Chengalpattu, Kancheepuram, and Ranipet. It includes the Greater Chennai Corporation, other municipal corporations, municipalities, town panchayats, and several villages.

Headed by the Minister for Housing and Urban Development, the CMDA coordinates development activities across local bodies. The CMDA regulates urban development through planning permissions for buildings and layouts, which serve as its primary revenue source. It coordinates with local authorities for plan implementation, sometimes delegating execution.

The CMDA relied primarily on planning permission fees and other internal revenues and had built a substantial corpus since 1972. The system of managing the finances within CMDA allowed it to operate without regular government grants, funding surveys, planning, and select development initiatives while maintaining solvency.

Officials say that planning fees roughly covered salary expenditures, enabling the authority to remain self-sustaining. It avoided heavy dependence on state government aid by focusing on its regulatory and planning roles, which generated steady income, and by not venturing deeply into capital-intensive construction.

What caused the mess

Raghul Nadh A R, member secretary of CMDA, told ThePrint that the authority faces this kind of financial crunch for the first time in its history and there are considerations being made to avoid the same in the coming years by allocating the construction works to the local bodies instead of CMD. 

“The reason behind the current financial situation is that CMDA ventured into construction which otherwise should have been undertaken by local bodies. It increased the expenditure and has led to a substantial increase in the liabilities. The works were undertaken without considering the financial condition of the CMDA,” Raghul Nadh said.

The CMDA undertook extensive construction projects beyond its core planning mandate over the last two years, spending nearly Rs 3,000 crore on libraries, Mudhalvarin Padaipagams, bus terminals, marriage halls, sports facilities, and other civic infrastructure.

The authority does not have a system for monitoring these projects, or undertake their quality control or maintenance. Therefore, the completed projects would be handed over to the local or nodal bodies like the Greater Chennai Corporation or Sports Development Authority, without generating returns for CMDA.

Raghul Nadh told ThePrint that the government has not yet given approval for the  aid request of Rs 200 crore. The request remains under consideration, he said. 

Additionally, several proposed construction projects are under review and might even be dropped. 

The state government has not made any comment on the matter yet.

(Edited by Ajeet Tiwari)