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POLICY REVIEW
Moreover, the city on municipal services by 94 cities under the Smart
governments in India hardly encouraging accountability Cities and AMRUT programs,
utilize user fees to cover even and transparency of the city only 59 per cent received an
operation and maintenance governments to their citizens. investment grade rating or
costs of basic services mainly above in 2018. In the last four
due to narrow political An analysis of crime rates years, out of 28 Municipal
compulsions, e.g., fear of given by the National Crime Corporations securing
losing votes and peoples’ Records Bureau (NCRB) investment-grade credit
dissatisfaction with the suggests that cities in India ratings, only five cities issued
municipal services. The fare poorly in terms of safety municipal bonds. Apart from
of living. The World Air
recent World Bank Report Quality Report, prepared by the weak financial health
highlighted that water Swiss organisation IQAir, of the city governments,
and sewerage utilities in is an index that listed 35 several structural bottlenecks
Indian cities recovered, Indian cities with the worst including non-transparent
on average, only 55% of air quality tag for 2021, and financial management,
their operating costs in little has changed since then. absence of specific
recent years. So, successful With respect to the ease of laws for addressing the
operationalization of the doing business, India ranks insolvency of the cities,
budgetary announcements 63 across the world among over-collateralisation and
rd
remains a huge challenge for 190 countries. Of late, the absence of secondary markets
Indian cities. climate change induced constrain the municipal bond
The Fifteenth Finance risks including cyclones, market in India.
Commission’s grant flooding, heat waves and While it reemphasizes
conditionalities in the form of so on have made the Indian the need for greater fiscal
notification of floor rates for cities vulnerable due to their autonomy of the city
property tax and subsequent location and diversity of governments, it is equally
linking of property tax geography. Mainstreaming necessary to build their
collections with the growth climate change mitigation capacities to manage
of states’ own GSDP lay and adaptation measures in commercial debt financing
strong foundations for the urban planning and policy in a meaningful, effective
financial accountability of frameworks is critical. and transparent manner.
municipalities. In addition, Therefore,we need regional Indian Cities urgently need
it requires overhauling the planning with active an integrated policy and
current practices, at a much involvement of empowered regulatory environment
higher scale as envisioned city governments. to improve revenue
in this year’s budget. In fact, PROMISING YET mobilization and to access
the success of these reforms and leverage public as well
is dependent on garnering CONCERNING as private funds for financing
sufficient and sustained public This Union Budget has a urban infrastructure on a
and political support at the renewed thrust for municipal sustainable basis.
city levels. Equally important bond issuances. However,
is to empower the city municipal bonds accounted In essence, Indian cities are
governments to impose taxes for less than one-tenth of the undoubtedly the largest
and fees and to strengthen total commercial debt raised drivers of economic growth in
the linkages between local by the city governments the 21 Century, but not at the
st
taxes and local expenditures during 2011-18. Out of the cost of inequity and lack of
April, 2023, Volume 24. No.1 - SHELTER 61
