A Deep Dive into the Finances of Municipal Corporations in India

The paper examines the state of finances of Municipal Corporations (MCs) in India analysing the audited financial statements of 166 MCs across 22 states over three years 2019-20 to 2021-22. While data on municipal finances are now available, there are issues that need to be addressed for making them usable and enabling comparison across MCs. The key financial indicators analysed include own revenues of MCs, dependence on transfers from higher tiers of government, extent to which their expenditures are met from own revenues, capital receipts, among others. The paper finds that MCs are not a homogenous group - smaller MCs are much more dependent on transfers; for larger MCs, own revenues are the dominant source of revenue. On average, own-revenues of MCs account for about 51-56 percent of their revenue expenditure. Of the few taxes levied by MCs, property tax is the most important tax. Dependence on transfers disincentivises raising revenues from own sources as also exploring new and innovative avenues. The findings of the paper would help policy makers to design and formulate policies that are in sync with the objective of building vibrant cities which are the growth engines of new India

Audit · Capital (architecture · Capital expenditure · Key (lock · Revenue · State (computer science · Tax revenue · USable · Fiscal Policies and Political Economy · Indian Economic and Social Development · Local Government Finance and Decentralization