Why cities aren’t able to give good quality life to people

Urban local bodies need to improve the collection efficiencies of their own revenues like property tax, says Janaagraha

GN Bureau | December 7, 2017


#municipal finances   #urban local bodies   #cities   #Janaagraha   #CAG  
Ashish Asthana
Ashish Asthana

We now know why people are not getting a good quality of life in cities. Janaagraha Centre for Citizenship and Democracy analysed the financial management of urban local bodies (ULB) and presented key insights on the state of municipal finances based on the audit reports of the CAG on their audits of ULBs in 21 states.

The brief is a precursor to the Annual Survey of India’s City-Systems (ASICS) that evaluates the quality of city systems in India across 18 states and analyses the financial management of Urban Local Bodies.
 
Urban planning & design, urban capacities & resources, empowered political leadership and transparency, accountability & public participation are the four city-system components covered under ASICS. The ability of Urban Local Bodies (ULBs) to invest adequately in providing infrastructure and services to its citizens is one of the key diagnostic parameters assessed by ASICS, said Janaagraha
 
Here are the highlights:
 
Insight 1: Own revenues on average contribute to less than 37% of the total receipts of ULBs, ranging from a low of 5% in Manipur to a high of 74% in Punjab; only 3 states record > 50% share of own revenues.
Impact: Total receipts Proportion of own revenues to total receipts (%) ULBs depend on State and Central grants to a significant extent, constraining their ability to make capital investments to improve infrastructure services and other investments to improve their functioning.
Recommendation: • ULBs need to improve collection efficiencies of own revenues, mainly, property tax, advertising tax and parking fees. • Buoyant sources of revenues such as stamp duties and entertainment taxes should be devolved to ULBs. • States needs to embark on systematic fiscal decentralization
 

Insight 2: On average (across 12 states), ULBs of capital cities spend 253% higher per capita, on infrastructure and services, as compared to average per capita spend by all ULBs in the corresponding states
Impact: This indicates lower per capita spend across smaller cities, resulting in poorer quality of life in such cities
Recommendation: The focus, currently concentrated only to large cities, must also shift to the smaller cities and towns in order to bridge the gap in per capita spend, by - • improving collections of own revenues of the ULBs in smaller cities and towns • devolving buoyant sources of revenue such as stamp duties and entertainment taxes should be devolved to ULBs, and • increasing grants devolved to smaller cities and towns to meet the infrastructure needs.
 

Insight 3 Significant delay in preparation of Accounts and Audit of ULBs across states, inability to ascertain accurate financial position and performance of ULBs
Impact: Constraining the ability of state governments to hold ULBs accountable and of ULBs themselves to take informed decisions or raise funds from the capital markets.
Recommendation: To clear the pendency in accounts and audit, States should actively consider empanelling Chartered Accountants. Karnataka, Bihar, Chhattisgarh, Gujarat, Odisha and Rajasthan are among the states that have empanelled Chartered Accountants to clear the backlog in audit and accounts.

 
Insight 4:  Over 33,198 unanswered audit observations from CAG Audits across 16 states, relating to several thousand crores in financial terms; no implications for open audit observations.
Impact: Open audit observations are a sign of weak internal controls and poor financial hygiene in ULBs, exposing them frauds and losses.
Recommendation: Time-bound, transparent responses to CAG audit observations to be mandated in Municipal Corporation Acts, central and state grants to be tied to performance in audits and responses to audit observations.

 
Insight 5: Significant backlog in CAG audits of local bodies undermining quality of TG&S by CAG
Impact: CAG audits are the last line of defence around internal controls in ULBs. Delays in CAG audit reflects lackadaisical approach to the audit process.
Recommendation: Fix accountability for submission of financial records of ULBs on time to CAG; make transparent time table of CAG audits and reasons for delays in CAG audits.
 

Comments

 

Other News

Spotting and nurturing young talent, helping them bloom

Things don’t turn up in this world, as former US president James A. Garfield once said, until someone turns them up. This is all the more so, when one considers the hidden gems that are waiting to be discovered. The world is full of talented young people who need just a nudge to provide that spark th

Khadi sets new record for single-day sale at Delhi shop

On Gandhi Jayanti this year, the Khadi India outlet in Connaught Place in the capital once again set a new record of khadi sales in a single day. In a single day, the Khadi India showroom at Connaught Place marked sale of Rs. 1.34 crore and broke its own previous record of Rs. 1.01 crore se

Mumbai Metro: Delay on Tracks

In Mumbai, the ninth most populous and congested city on the planet, high rentals compel citizens to spend five hours on an average travelling to work every day. Mumbai’s Metro Rail System extending towards Mumbai Metropolitan Region (MMR) will not only provide East-West connectivity

Sustainable tourism is responsible tourism

Tourism is a huge part of global culture nowadays and is also one of the biggest sources of revenue across the world. According to the World Travel and Tourism Council (WTTC), in 2019, the tourism industry contributed $8.9 trillion or 10.3% to the global GDP. The industry witnessed a massive lull in 2020 d

Fernandes: A Life as Legacy

The Life and Times of George Fernandes By Rahul Ramagundam Penguin/New India Foundation, 624 pages, Rs 799 Amer

India set to enter 5G era

After years of intense preparation, India is about to take the next step in information and communication technology. Prime Minister Narendra Modi will launch 5G services in India on October 1 and also inaugurate the 6th Edition of India Mobile Congress 2022 to be held till October 4, at Pragati Maidan, Ne

Visionary Talk: Amitabh Gupta, Pune Police Commissioner with Kailashnath Adhikari, MD, Governance Now


Archives

Current Issue

Opinion

Facebook    Twitter    Google Plus    Linkedin    Subscribe Newsletter

Twitter