Analysing the Finances of Urban Local Bodies in India: A Cross-Sectional Study

IPE Journal of Economic and Policy Research 7(1): 32-58, 2012

Posted: 24 Apr 2013

Date Written: August 24, 2009

Abstract

With rapid urbanisation and the pressure on urban areas for service delivery, the role of urban local governments is undoubtedly becoming important and, here, their financial capacity can hold the key. At the same time, there are several issues in urban governance that need to be addressed yet. Delegation of decision-making powers to Urban Local Bodies (ULBs), which are traditionally considered as a part of the system of state government and acting on behalf of it, is one of them. The constitutional mechanisms like inter-governmental fiscal transfers were an attempt to reduce the fiscal gap of ULBs, but they were not effective in translation/implementation at ground. It has become imperative now to understand the financial position of ULBs in order to move forward with the new means of fund flow. This paper presents a cross-sectional analysis of the finances of 35 ULBs in India in terms of their financial base and its adequacy vis-à-vis norms and their revenue and expenditure performance. Using certain ratios, the relative performance of municipalities on de-centralisation and dependency measures was also assessed. The implications to the finances of ULBs, in terms of raising resources, improving intergovernmental transfers and charting new mechanisms are also discussed.

Keywords: Urban local bodies, municipal finance, inter-government transfers, revenue and expenditure

Suggested Citation

Nallathiga, Ramakrishna, Analysing the Finances of Urban Local Bodies in India: A Cross-Sectional Study (August 24, 2009). IPE Journal of Economic and Policy Research 7(1): 32-58, 2012. Available at SSRN: https://ssrn.com/abstract=2255841

Ramakrishna Nallathiga (Contact Author)

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