Indian Municipal Finance 2023

Mithlesh Verma, Sovini Mondal, Amir Bazaz, Manish Dubey | 2023


This study examines decadal time-series data from 33 Urban Local Bodies (ULBs) of varying sizes across India. The analysis reveals persistent challenges, including high dependence on Inter-Governmental Transfers (IGTs), fluctuations in tax revenue, and limited spending on Operations and Maintenance (O&M). Capital expenditures are primarily driven by program-based IGTs, prompting a reevaluation of strategies to enhance own revenue mobilization. The study emphasizes the link between revenue efforts and O&M, advocating for improved current spending to sustain existing infrastructure and support new investments.

Opportunities lie in designing IGTs to encourage revenue mobilization and exploring commercial financing options among ULBs. Strengthening state financial intermediaries is crucial for achieving these goals. Fluctuations in tax revenue, especially during real estate booms, suggest room for streamlining efforts. The study also applauds smaller cities for prioritizing local concerns in capital expenditure, potentially addressing broader financial challenges faced by Indian ULBs.


Rekha Test

Amir Bashir Bazaz  | 4 June 2015 

Key Questions

Assumed that a project idea has been finalized, how do we estimate the quantum of money that is required?

From where are we going to raise the required amount of money?

How do we justify the amount identified to be invested in the project conceptualized?

What are therefore; the municipal finance challenges? Can we understand the limitations, opportunities/possibilities?