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POLICY REVIEW
in place to avoid digging of setting up of a Rs 10,000 crore non-tax revenue in total
roads every time a pipeline or per year Urban Infrastructure municipal revenue) for all the
cables have to be laid down. Development Fund (UIDF) city governments registered
under the aegis of the National declined from 51 per cent in
It promotes planned Housing Bank (NHB) for the 2010-11 to 43 per cent in 2017-
infrastructure where separate purpose of financing urban 18. This indicates the growing
lines for communication, infrastructure. Funds under fiscal dependency of the city
sewage, water, industrial the UIDF are expected to be governments, especially
effluents, electricity and gas amassed through the use the Municipal Councils
are laid all at once, preventing of priority sector lending and Nagar Panchayats, on
re-digging and re-laying of shortfall with the specific higher levels of government
roads. The National Industrial aim of creating urban for meeting their revenue
Corridors have seen an infrastructure in Tier-2 and shortfalls.
increase in its budgetary Tier-3 cities.
allocation from INR 1500 Reforms in property tax
crore (BE) in 2022-23 to INR This Budget has also governance and ring-
2000 crores (BE) in 2023-34. announced incentives fencing of user charges, as
At the same time, the actual for improving the announced by the Finance
expenditure was INR 1104 creditworthiness of the Minister, are, therefore, timely
crores in 2021-22. city governments to enable interventions for improving
them to access the capital the financial health of the
In addition to this, the market for financing urban city governments. Property
Hon’ble Finance Minister, in infrastructure. However, the Tax is the most important
her speech, spoke of the scope finances of city governments urban local tax in India and
of the impetus of PM Gati are in a grossly unsatisfactory its importance has increased
Shakti National Master Plan state. As per the ICRIER (2019) in the post-GST period.
for Multi-modal Connectivity, Report, municipal revenue However, with a contribution
which will encompass remained stagnant at around of only 0.15 per cent to India’s
seven engines for economic one per cent of GDP during GDP, the revenue collections
transformation, seamless the period from 2007-08 to from property tax are
multi-modal connectivity 2017-18 and the municipal significantly low.
and logistics efficiency. own revenue as per cent of
Proper implementation of GDP was only 0.43 per cent in Wide spread use of manual
this scheme could address 2017-18. and paper-based systems of
property register; improper
the poor state of logistics and Among the different categories valuation methods without
supply chains in the smaller of city governments, any link to actual (market)
cities and better connect them Municipal Corporations value of properties; inefficient
with their larger counterparts, contribute nearly 80 per tax collections and absence
and thus, push for planned cent to India’s municipal of penal measures for
and balanced urbanisation. own revenue owing to their delayed or non-payment of
IMPROVING THE strong economic base and property taxes coupled with
FINANCIAL HEALTH OF the capacity to mobilise lack of grievance redressal
sufficient tax and non-tax
mechanisms have seriously
CITIES
revenues. Importantly, the undermined the revenue
One of the key takeaways revenue autonomy ratios generation potentials of
of the Union Budget is the (proportion of the tax and property tax in India.
60 HUDCO-HSMI Publication
