Indian municipalities are the weakest in the world in terms of their access to resources, revenue raising capacity, and financial autonomy, says Union Minister for Urban Development M. Venkaiah Naidu, who suggested that a share of the money raised by the government through Goods and Services Tax (GST) must go to local bodies to help them engage in urban reconstruction.
The Minister was speaking at a national workshop organised by the Indian Council for Research in International Economic Relations with the support of the Urban Development Ministry. He observed that there was a huge fiscal gap, which could be bridged through assured income flow, said a statement by the Press Information Bureau.
Mr. Naidu expressed his concern about the large share of municipal income going towards paying salaries while mandated activities receiving a much smaller share.
The Minister cited a report by a consultancy that the yearly per capita income of all municipalities was Rs.1,430 whereas their expenditure amounted to Rs.6,030. This called for what he called “predictable and guaranteed” fund flow to the municipalities. The issue of sharing GST revenue with municipalities would be taken up with the Finance Ministry, he said.
Assured flow of fund apart, urban governance required reforms, which would be promoted under new initiatives, the Minister said. e-governance, creation of professional municipal cadres, integrated long-term urban planning, devolution of funds, double-entry accounting, improving revenue collection, energy and water audits, and credit-rating municipalities were some of the thrust areas.
Public-private partnerships (PPP) were needed to address the issue of urban infrastructure deficit. Such partnerships were necessary especially for mobilising resources for programmes such as the Smart City project. Mr. Naidu observed that PPP successes had been linked mostly to projects with low gestation period and simple technologies. However, more complex infrastructure projects too needed PPPs for which effective institutional frameworks were needed.
Over and above the lack of fund flow, the Minister also highlighted the “inadequate capacities of urban local bodies.” Priority, therefore, was on capacity building and government wanted a portion of the cost of every project to be spent on capacity building, promoting hubs for capacity building, knowledge-sharing, and information about best practice.
A large share of municipal income goes towards paying salaries while mandated activities receive a much smaller share
