Exploratory study on finances of municipalities in Gujarat (Also available on CD)
Sharma, Abha
Exploratory study on finances of municipalities in Gujarat (Also available on CD) - 2009 - xix,99,xvip.CD-ROM
CONTENTS Certificate ii Undertaking iii Table of CONTENTS iv List of Tables viii List of Figures x List of Abbreviations xi Acknowledgement xii Executive Summary xiii 1. INTRODUCTION 1 1.1. Introduction 1 1.1.1. Background to the Study 1 1.1.2. Urban Local Bodies in India 1 1.1.3. Status of ULB Financing 2 1.2. Research Problem 3 1.3. Research Objectives 5 1.4. Research Question 5 1.5. Research Design 6 1.5.1. Scope of Study 6 1.5.2. Research Methodology 6 1.5.3. Structure of the Report 7 2. LITERATURE REVIEW 8 Section A: Concept and Principles of Municipal Finance 8 2.1. Importance of Local Public Finance 8 2.2. Resources of Local Bodies 8 2.2.1. Revenue Base of Municipalities 9 2.2.2. Expenditure Domain of municipalities 10 2.2.3. Principles of Tax Assignment (Musgrave 1983) 10 2.2.4. Choice of local taxes 12 2.2.5. Sources for Local Body Finances 12 2.2.6. Imbalance of Revenues and Responsibilities 14 2.2.7. Inter-Governmental Fiscal Transfers 16 2.2.8. Indian Studies on Municipal Finance 17 Section B: Municipal Resource Mobilization 20 2.3. Municipal Borrowing 20 2.3.1. Status of Municipal Borrowing in India 20 2.3.2. Municipal Bonds 20 2.3.3. Term Loans from Commercial Banks 22 2.3.4. Term Loans from HUDCO 22 2.3.5. Internal borrowings 23 2.3.6. Combination of Borrowing Options 23 2.4. Public Private Partnerships 24 2.4.1. Concept 24 2.4.2. Need for Public Private Partnerships 25 2.4.3. Unbundling of Services 26 2.5. Pooled Finance Structures 26 2.5.1. Tamil Nadu Urban Development Fund 26 2.5.2. Sustainability of the TNUDF Design 28 2.5.3. Pool Finance Scheme by Government of India 29 2.6. User Charges 29 2.6.1. Concept 29 2.7. Property Tax 30 2.7.1. Methods of PT assessment 30 2.7.2. Issues with Area based method of PT assessment 31 2.7.3. PT Reform Issues and Challenges 31 2.7.4. Case Studies-PT Collection and Management Practices in Cities 32 2.8. Recommendations of 11th FYP for Urban Infrastructure 34 2.8.1. Thrust of Eleventh FYP towards Municipal Finances 35 Section C: Urban Reform and Development Initiatives 36 2.9. Central Government Grants for Infrastructure 36 2.10. URIF by Government of India 37 2.11. IDSMT 37 2.12. UIDSSMT 37 2.13. JNNURM 38 2.14. CLIFF 38 2.15. Initiatives in Gujarat 39 2.15.1. BIG 2020: GIDB 39 2.15.2. Creation of Revolving Fund for Urban Infrastructure 40 2.15.3. Other Initiatives in Gujarat 40 2.15.4. Summary 40 3. GUJARAT MUNICIPAL SECTOR 42 3.1. Municipal Sector in Gujarat 42 3.2. Functions and Responsibilities of ULBs 42 3.3. Expenditure and Revenue Assignment 43 3.4. Role of State Finance Commissions (SFC) 44 3.5. SFCs' different approaches for devolution of taxes to ULBs 44 3.6. Provision of Gujarat Municipalities Act 46 3.7. Major Issues 47 3.8. Institutional Arrangement in Municipal Sector of Gujarat 48 3.9. Finances of Municipalities in Gujarat 49 3.9.1. Trends in Finances of all Municipalities in Gujarat State 49 3.10. Income of Municipalities in Gujarat 51 3.11. Expenditure of Municipalities in Gujarat 53 3.12. Per capita income and expenditure 54 3.13. Class wise Finances of Municipalities in Gujarat 55 3.14. Gujarat State Finance Commission 56 3.15. Investment Needs 57 3.15.1. Grant Requirement from 13th FC for Gujarat State 57 4. ASSESSMENT OF MUNICIPAL FINANCES 59 4.1. Selection of Cases 59 4.1.1. Criteria for Selection of Towns 59 4.2. Case 1: Nadiad 60 4.2.1. Municipal Finance Scenario of Nadiad 61 4.2.2. Revenue Income 62 4.2.3. Property Tax 63 4.2.4. External Sources of Revenue Income 64 4.2.5. Details of Revenue Expenditure 65 4.2.6. Debt Liabilities 65 4.2.7. Capital Account 66 4.3. Case 2: Himmatnagar 67 4.3.1. Municipal Finance Scenario in Himmatnagar 68 4.3.2. Revenue Account 68 4.3.3. Property Tax 69 4.3.4. Details of Revenue Expenditure 70 4.3.5. Debt Liabilities 71 4.3.6. Capital Account 71 4.4. Case 3: Khedbrahma 72 4.4.1. Municipal Finance Scenario in Khedbrahma 73 4.4.2. Revenue Account 74 4.4.3. Details of Property Tax 74 4.4.4. Revenue Expenditure 75 4.4.5. Debt Liabilities 75 4.4.6. Capital Account 75 5. SCENARIO GENERATION 77 5.1. Comparative Analysis of Case Towns 77 5.1.1. Indicators for Efficiency Assessment 77 5.1.2. Performance of the Municipalities 78 5.1.3. Growth Trends in Income and Expenditure 80 5.1.4. Resource Gap 82 5.1.5. Level of Municipal Spending 83 5.1.6. Per Capita Assessments 85 5.1.7. Capital Investments required by Municipalities 87 5.1.8. Urban Infrastructure in Case Towns 88 5.1.9. Status of Case Towns 88 5.2. Scenario Generation 90 5.2.1. Meeting the Under Spending Levels 90 5.2.2. Increasing the PT efficiency 91 5.2.3. Meeting under spending levels and increasing collection efficiency of PT 92 5.2.4. Decreasing the share of Revenue Grants 93 5.2.5. Examining Alternatives 94 6. CONCLUSIONS & RECOMMENDATIONS 96 6.1. Conclusions 96 6.2. Recommendations 97 6.2.1. Action Plan 97 6.2.2. Strengthening the Revenue Account 97 6.2.3. Borrowing 98 6.2.4. Human Resources Development 98 6.2.5. Other Areas for Reforms 99 BIBLIOGRAPHY 100 ANNEXURE 102 Annexure A: Selection of Case Towns 102 Annexure B: Per Capita Assessments and Standard Deviations 105 Annexure C: Projections of Various Income and Expenditure Heads 108 Annexure D: Population Projections 110
P TH-1070 / SHA
Exploratory study on finances of municipalities in Gujarat (Also available on CD) - 2009 - xix,99,xvip.CD-ROM
CONTENTS Certificate ii Undertaking iii Table of CONTENTS iv List of Tables viii List of Figures x List of Abbreviations xi Acknowledgement xii Executive Summary xiii 1. INTRODUCTION 1 1.1. Introduction 1 1.1.1. Background to the Study 1 1.1.2. Urban Local Bodies in India 1 1.1.3. Status of ULB Financing 2 1.2. Research Problem 3 1.3. Research Objectives 5 1.4. Research Question 5 1.5. Research Design 6 1.5.1. Scope of Study 6 1.5.2. Research Methodology 6 1.5.3. Structure of the Report 7 2. LITERATURE REVIEW 8 Section A: Concept and Principles of Municipal Finance 8 2.1. Importance of Local Public Finance 8 2.2. Resources of Local Bodies 8 2.2.1. Revenue Base of Municipalities 9 2.2.2. Expenditure Domain of municipalities 10 2.2.3. Principles of Tax Assignment (Musgrave 1983) 10 2.2.4. Choice of local taxes 12 2.2.5. Sources for Local Body Finances 12 2.2.6. Imbalance of Revenues and Responsibilities 14 2.2.7. Inter-Governmental Fiscal Transfers 16 2.2.8. Indian Studies on Municipal Finance 17 Section B: Municipal Resource Mobilization 20 2.3. Municipal Borrowing 20 2.3.1. Status of Municipal Borrowing in India 20 2.3.2. Municipal Bonds 20 2.3.3. Term Loans from Commercial Banks 22 2.3.4. Term Loans from HUDCO 22 2.3.5. Internal borrowings 23 2.3.6. Combination of Borrowing Options 23 2.4. Public Private Partnerships 24 2.4.1. Concept 24 2.4.2. Need for Public Private Partnerships 25 2.4.3. Unbundling of Services 26 2.5. Pooled Finance Structures 26 2.5.1. Tamil Nadu Urban Development Fund 26 2.5.2. Sustainability of the TNUDF Design 28 2.5.3. Pool Finance Scheme by Government of India 29 2.6. User Charges 29 2.6.1. Concept 29 2.7. Property Tax 30 2.7.1. Methods of PT assessment 30 2.7.2. Issues with Area based method of PT assessment 31 2.7.3. PT Reform Issues and Challenges 31 2.7.4. Case Studies-PT Collection and Management Practices in Cities 32 2.8. Recommendations of 11th FYP for Urban Infrastructure 34 2.8.1. Thrust of Eleventh FYP towards Municipal Finances 35 Section C: Urban Reform and Development Initiatives 36 2.9. Central Government Grants for Infrastructure 36 2.10. URIF by Government of India 37 2.11. IDSMT 37 2.12. UIDSSMT 37 2.13. JNNURM 38 2.14. CLIFF 38 2.15. Initiatives in Gujarat 39 2.15.1. BIG 2020: GIDB 39 2.15.2. Creation of Revolving Fund for Urban Infrastructure 40 2.15.3. Other Initiatives in Gujarat 40 2.15.4. Summary 40 3. GUJARAT MUNICIPAL SECTOR 42 3.1. Municipal Sector in Gujarat 42 3.2. Functions and Responsibilities of ULBs 42 3.3. Expenditure and Revenue Assignment 43 3.4. Role of State Finance Commissions (SFC) 44 3.5. SFCs' different approaches for devolution of taxes to ULBs 44 3.6. Provision of Gujarat Municipalities Act 46 3.7. Major Issues 47 3.8. Institutional Arrangement in Municipal Sector of Gujarat 48 3.9. Finances of Municipalities in Gujarat 49 3.9.1. Trends in Finances of all Municipalities in Gujarat State 49 3.10. Income of Municipalities in Gujarat 51 3.11. Expenditure of Municipalities in Gujarat 53 3.12. Per capita income and expenditure 54 3.13. Class wise Finances of Municipalities in Gujarat 55 3.14. Gujarat State Finance Commission 56 3.15. Investment Needs 57 3.15.1. Grant Requirement from 13th FC for Gujarat State 57 4. ASSESSMENT OF MUNICIPAL FINANCES 59 4.1. Selection of Cases 59 4.1.1. Criteria for Selection of Towns 59 4.2. Case 1: Nadiad 60 4.2.1. Municipal Finance Scenario of Nadiad 61 4.2.2. Revenue Income 62 4.2.3. Property Tax 63 4.2.4. External Sources of Revenue Income 64 4.2.5. Details of Revenue Expenditure 65 4.2.6. Debt Liabilities 65 4.2.7. Capital Account 66 4.3. Case 2: Himmatnagar 67 4.3.1. Municipal Finance Scenario in Himmatnagar 68 4.3.2. Revenue Account 68 4.3.3. Property Tax 69 4.3.4. Details of Revenue Expenditure 70 4.3.5. Debt Liabilities 71 4.3.6. Capital Account 71 4.4. Case 3: Khedbrahma 72 4.4.1. Municipal Finance Scenario in Khedbrahma 73 4.4.2. Revenue Account 74 4.4.3. Details of Property Tax 74 4.4.4. Revenue Expenditure 75 4.4.5. Debt Liabilities 75 4.4.6. Capital Account 75 5. SCENARIO GENERATION 77 5.1. Comparative Analysis of Case Towns 77 5.1.1. Indicators for Efficiency Assessment 77 5.1.2. Performance of the Municipalities 78 5.1.3. Growth Trends in Income and Expenditure 80 5.1.4. Resource Gap 82 5.1.5. Level of Municipal Spending 83 5.1.6. Per Capita Assessments 85 5.1.7. Capital Investments required by Municipalities 87 5.1.8. Urban Infrastructure in Case Towns 88 5.1.9. Status of Case Towns 88 5.2. Scenario Generation 90 5.2.1. Meeting the Under Spending Levels 90 5.2.2. Increasing the PT efficiency 91 5.2.3. Meeting under spending levels and increasing collection efficiency of PT 92 5.2.4. Decreasing the share of Revenue Grants 93 5.2.5. Examining Alternatives 94 6. CONCLUSIONS & RECOMMENDATIONS 96 6.1. Conclusions 96 6.2. Recommendations 97 6.2.1. Action Plan 97 6.2.2. Strengthening the Revenue Account 97 6.2.3. Borrowing 98 6.2.4. Human Resources Development 98 6.2.5. Other Areas for Reforms 99 BIBLIOGRAPHY 100 ANNEXURE 102 Annexure A: Selection of Case Towns 102 Annexure B: Per Capita Assessments and Standard Deviations 105 Annexure C: Projections of Various Income and Expenditure Heads 108 Annexure D: Population Projections 110
P TH-1070 / SHA