Table of contents Executive summary 16 1. Introduction 23 1.1. Brief background 23 1.2. Importance of municipal finance to cities 25 1.3. Rationale 26 1.4. Research problem 30 1.5. Key research questions and objectives 32 1.5.1. Research questions 32 1.5.2. Objectives 32 1.6. Scope and limitation 33 1.6.1. Scope 33 1.6.2. Limitation 33 1.7. Methodology 34 2. Literature review 35 2.1. Importance of local public finance 35 2.2. Resources of local bodies 35 2.2.1. Revenue base of municipalities 36 2.2.2. Expenditure domain of municipal corporations 37 2.2.3. Principles of tax assignment 37 2.2.4. Choice of local taxes 39 2.2.5. Sources for local body finances 40 2.2.6. Imbalance of revenues and responsibilities 40 2.2.7. Indian studies on municipal finance 42 2.3. Municipal borrowings 45 2.3.1. Status of municipal borrowing in india 45 2.3.2. Municipal bonds 45 2.3.3. Term loans from commercial banks 46 2.3.4. Term loans from hudco 47 2.3.5. Internal borrowings 47 2.3.6. Public private partnerships 48 2.3.7. Unbundling of services 48 2.3.8. Pooled finance structures 48 2.3.9. Pool finance scheme by government of india 49 2.3.10. User charges 50 2.3.11. Property tax 50 2.4. Urban development institutions 51 2.4.1. Urban development & urban housing department 51 2.4.2. Gujarat municipal finance board (gmfb) 52 2.4.3. Gujarat housing board 52 2.4.4. Gujarat urban development company 52 2.4.5. Gujarat urban development mission (gudm) 52 2.5. Schemes for urban development 54 2.5.1. Urban infrastructure development scheme for small and medium towns (uidssmt) 54 2.5.2. Jawaharlal nehru national urban renewal mission (jnnurm) 55 3. Cross sectional analysis of municipal corporations of gujarat 59 3.1. Revenue performance 59 3.1.1. Per capita total receipt 60 3.1.2. Growth of per capita total tax revenue 61 3.1.3. Growth of per capita revenue income 62 3.1.4. Composition of tax and non tax revenue of top performers 63 3.1.5. Decentralisation 65 3.1.6. Dependency 66 3.2. Expenditure performance 67 3.2.1. Level of revenue expenditure 67 3.2.2. Relative shares of expenditure 68 3.2.3. Quality of expenditure 69 3.2.4. Cost recovery 70 4. Assessment of municipal finances in case cities 72 4.1. Selection of cases 72 4.1.1. Population 72 4.1.2. Per capita income and expenditure 73 4.1.3. Geographical spread 74 4.2. Case 1: ahmedabad municipal corporation 76 4.2.1. Municipal finance scenario of ahmedabad municipal corporation 77 4.2.2. Revenue income - ahmedabad municipal corporation 78 4.2.3. Revenue expenditure – ahmedabad municipal corporation 80 4.2.4. Capital account – ahmedabad municipal corporation 81 4.3. Case 2: vadodara municipal corporation 84 4.3.1. Municipal finance scenario of vadodara municipal corporation 85 4.3.2. Revenue income – vadodara municipal corporation 87 4.3.3. Revenue expenditure – vadodara municipal corporation 88 4.3.4. Capital account – vadodara municipal corporation 89 4.4. Case 3: jamnagar municipal corporation 92 4.4.1. Municipal finance scenario of jamnagar municipal corporation 93 4.4.2. Revenue income – jamnagar municipal corporation 95 4.4.3. Revenue expenditure – jamnagar municipal corporation 96 4.4.4. Capital account – jamnagar municipal corporation 97 4.5. Comparative analysis 100 4.5.1. Growth trend in income and expenditure 100 4.5.2. Operating revenue ratio (orr) 102 4.5.3. Capital utilisation ratio (cur) 103 5. Status of urban infrastructure 106 5.1. Water supply 106 5.1.1. Water utilisation factor 106 5.1.2. Population covered with piped water supply 107 5.1.3. Per capita water supply 108 5.2. Sanitation 109 5.3. Solid waste disposal 110 6. Under spending 111 6.1. Zakaria committee norms 111 6.1.1. Overall under spending 113 6.1.2. Sectoral under spending - ahmedabad 114 6.1.3. Sectoral under spending - vadodara 115 6.1.4. Sectoral under spending - jamnagar 115 6.2. Hpec norms 117 6.2.1. Overall under spending 119 6.2.2. Sectoral under spending - ahmedabad 120 6.2.3. Sectoral under spending - vadodara 121 6.2.4. Sectoral under spending - jamnagar 121 7. Conclusions 123 7.1. Overall fiscal trend 123 7.2. Revenue income 124 7.3. Revenue expenditure 124 7.4. Under spending 124 7.4.1. Dependency and under spending 125 7.4.2. Decentralisation and under spending 125 7.4.3. Cost recovery and under spending 126 7.4.4. Establishment expenditure and under spending 127 7.5. Scenario generation 128 7.5.1. Increasing the property tax collection efficiency 129 7.5.2. Increasing the property tax 130 7.5.3. Increasing the cost recovery of core urban services 132 7.5.4. Other areas of reforms 134 Bibliography 136