As Covid-19 sweeps through India, the outbreak has been most intense in the country’s largest cities. The pandemic has put India’s urban pu...
As Covid-19 sweeps through India, the outbreak has been most intense in the country’s largest cities. The pandemic has put India’s urban public health systems under stress, both infrastructurally and economically. In addition, the municipal finance systems that support the activities necessary to fight the pandemic on the local level have also been put under pressure.
Municipalities in India raise finances through a variety of sources: they generate their own revenues from property tax, stamp duty, entertainment tax and other local cesses; they get grants from the state and Central government, they take loans from banks and other institutions as well as by raising municipal bonds. They also have revenues from sundry sources such as rents from entities that use public premises, unclaimed security deposits, fines from contractors who fail to fulfil contracts and more.
In line with the trend in big cities around the world, property tax dominates the revenue basket of India’s local governments – accounting for almost 60% of their revenues.
Mismatch between revenues, responsibilities
Public Finance experts say that municipal expenditure should be consistent with the revenues raised. But in India, out of the 18 functions assigned to municipal governments by state governments, less than half have been allotted a corresponding financing source. Due...
