Meeting a Revenue Target With Twenty-Eight Lakh Still Missing
You are the Nayab Subba of a municipality ward with an annual internal revenue target of Rs 1,25,00,000. In the first nine months, Shrawan to Chaitra, the ward collected Rs 86,40,000 - of which Rs 26,88,000 is house and land tax and the rest is rent tax, business tax and service fees. In the last three months the ward historically collects Rs 11,20,000 from existing flows. The ward has 3,200 households, of which 1,920 have been assessed; the average annual tax per assessed household is Rs 1,400. Previous years' arrears outstanding are Rs 14,50,000, and past recovery drives have realised about 70 per cent of arrears. Two temporary enumerators can be hired at Rs 22,000 each per month for three months, and a household survey costs about Rs 50 per household.
1. Work out how much the ward must still collect and whether the target is reachable on the present course. Show your figures.
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Gap calculation
| Item | Amount (Rs) |
|---|---|
| Annual target | 1,25,00,000 |
| Collected in 9 months | 86,40,000 |
| Still to be collected | 38,60,000 |
| Expected from existing flows in last 3 months | 11,20,000 |
| Shortfall to be covered by new effort | 27,40,000 |
Is the target reachable on the present course? No. Doing nothing yields about Rs 11,20,000 against a requirement of Rs 38,60,000, leaving Rs 27,40,000 uncovered - roughly 71 per cent of the remaining requirement.
Where the money could come from:
- Unassessed households: 3,200 - 1,920 = 1,280 households. At Rs 1,400 average tax, full assessment is worth 1,280 × 1,400 = Rs 17,92,000.
- Arrears: 70 per cent of Rs 14,50,000 = Rs 10,15,000.
- Combined realistic potential: 17,92,000 + 10,15,000 = Rs 28,07,000, which just exceeds the Rs 27,40,000 gap only if all unassessed households are actually reached. That is not credible in three months, so the honest projection needs a coverage assumption, not a wish.
2. Advise whether the two enumerators should be hired. Support the recommendation with a cost-benefit calculation.
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Cost: 2 enumerators × Rs 22,000 × 3 months = Rs 1,32,000; survey cost 1,280 households × Rs 50 = Rs 64,000; total Rs 1,96,000.
Benefit: at a realistic 80 per cent coverage, 1,024 households × Rs 1,400 = Rs 14,33,600 of new tax assessed and collected in the same season. Break-even requires only 1,96,000 ÷ 1,400 = 140 households, about 11 per cent of the unassessed pool, so the risk is very low.
Net gain: 14,33,600 - 1,96,000 = Rs 12,37,600, and 256 households remain for the next year's drive.
Arrears drive in parallel: using existing staff with reminder notices, a 70 per cent recovery adds Rs 10,15,000 at little extra cost.
Projected position: 11,20,000 + 14,33,600 + 10,15,000 = Rs 35,68,600 against a requirement of Rs 38,60,000 - a shortfall of Rs 2,91,400, about 7.5 per cent of the remaining requirement. So the recommendation is: hire the enumerators, run the arrears drive, and still report an expected shortfall rather than promise the target. The hiring decision is justified on its own numbers regardless of whether the annual target is met, because the tax assessed is recurring revenue in future years.
3. What should you report to the municipality, and what would you refuse to do even if pressed to show the target as met?
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Report: the target, the nine-month collection, the Rs 38,60,000 remaining requirement, the projected Rs 35,68,600, the Rs 2,91,400 shortfall, and the reasons - 1,280 households still unassessed, arrears ageing, and the seasonal concentration of collections. Attach the enumerator cost-benefit note, the arrears statement by age, and the ward's action plan for the final quarter.
What not to do: do not count the enumerator survey cost as revenue, do not book next year's advance collection as this year's income, do not show the arrears as recovered before the cash is actually received, and do not inflate the assessment figures to close the gap on paper. Each of these converts a performance shortfall into a financial irregularity and shifts the problem to the audit report.
Constructive alternative: propose a formal revision of the ward's revenue target with the municipality, backed by the projection, and ask for a small incentive budget for the arrears drive. A revised, defensible target is always better than a fabricated achievement - the unassessed households will still be there next year, and the ward should carry an explicit coverage plan rather than a written-off balance.