Analysis of Finances of Some Selected Municipal Corporations of Gujarat

Abstract

Local bodies like Municipal Corporation play an important part in the working democracy in a vast country like India. Recent history strongly suggests that the power of local initiative is a sine qua non of successful and stable democracy. India has been experiencing a very fast growth rate of urbanization. Finance is considered as the lifeblood of commerce and industry. Local self-governments can work smoothly only when the resources at their disposal are adequate and they have to be utilized in an effective and efficient manner. The relation between local functions and local finance is inseparably intertwined. Local finance at the bottom of the public finance pyramid can serve as the engine of economic development. Accounting is an important tool of financial management. It involves not only keeping all the records of financial transactions but also analyzing these transactions and supplying the necessary information to the authorities for forecasting, planning and exercising control. The study is an attempt to undertake a comparative study of Financial Management of local self-government of Municipal Corporation in Gujarat state with reference to Ahmedabad Municipal Corporation (AMC), Surat Municipal Corporation (SMC),Vadodara Municipal Corporation (VMC) and Rajkot Municipal Corporation (RMC) in order to suggest the suitable strategies to sustain and/or improve their financial management. The performance is measured through relative comparison of the MCs in cross section in terms of absolute figures. All major heads of income and expenditure of all MCs have been analyzed through ANOVA (one way).Analysis of municipal finances reveals that MCs are generating small revenue surplus with low resources gaps. There is a high variation found in growth rate of per capita expenditure in all MCs. There is a high variation found in growth rate of per capita expenditure in all MC.

Keywords: Municipal Corporation, Municipal Finance, Gujarat

JEL Classification: H7, H710, H720