CHAPTER – V ANALYSIS OF FINANCES OF THE...

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CHAPTER – V

ANALYSIS OF FINANCES OF THE SELECTED MUNICIPAL CORPORATIONS OF U.P.

The present study purports to investigate the pattern of local finances in four

municipal corporations of Uttar Pradesh from 1995-96 to 2010-11. There are two

ways of approaching the problem of municipal finance through mobilization of local

resources. The first is to undertake an empirical study of the actual expenditure and

revenue of each municipal corporation and determine the overall trends for a given

period of time. This information would be supplemented by assessing the

development actually achieved during this period. Such an approach is not possible

because the required information is not readily available for all the municipal

corporations of Uttar Pradesh. Furthermore, many municipal corporations have

prepared town development plans or schemes under the town planning act but these

are essentially land use plans to control city structure and direction of growth of the

city. The other approach would be to undertake an intensive study of a few cases.

This is the only feasible method for investigating financial performance of urban

local bodies of a state of the size and population of Uttar Pradesh.

It is observed that a good number of municipal corporations do not fulfill the

condition of being reckoned as urban areas. A non-random sampling i.e. judgment

sampling of municipal corporations may provide better picture of financial situation

of urban local bodies. For this reason, we have selected four municipal corporations,

namely Agra, Aligarh, Allahabad, and Meerut. While the Agra, Aligarh, and Meerut

are industrially developed areas, Allahabad is a non industrial area in its economic

character. The study highlighted the state of local finances, its pattern of expenditure

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in relation to improvement of services of municipal corporations. Special attention

has been given to the consideration of the adequacy or otherwise of local revenues

and problems that local administration faces in raising the required resources. In this

connection some specific sources of revenue, have been taken up for investigation in

view of their importance. The greater part of the study has been devoted to the

analysis of the overall pattern of local revenue, expenditure and its role in the

promotion of municipal corporation’s services. However, it did not take in to

account other aspects of urban development like housing and employment which

were beyond the scope of the study, being listed as state subjects.

5.1 Agra Municipal Corporation

Agra city is one of the major cities of Uttar Pradesh. Its history dates back to 1475

AD when Raja Singh Badal laid the foundation for the city. It is best known as the

home of the Taj Mahal, and as an important tourist destination, transport hub and

commercial centre Situated in the extreme southwest corner of Uttar Pradesh, Agra

stretches across 26° 44' N to 27° 25' N and 77° 26' E to 78° 32' E. Its borders touch

Rajasthan to its west and south, the district of Firozabad to its East and the districts

of Mathura and Etah to its North. Agra is well connected from Delhi and Jaipur. It

has its own domestic airport named as Kheria, which is only 5 km from the city. All

major domestic airlines provide flight services to and from the city of Taj. It is well

connected by a network of trains to almost all major destinations throughout the

country. Agra has seven railway stations of its own, excluding the Tundla junction,

which is just one hour away from the city. Agra boasts of three National Highways

including N.H. 2, 3 and 11. The government and private bus services are available to

and from Agra to all of the nearby major destinations. Some important tourist

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destinations situated in the city and in nearby areas include: the Taj Mahal, Agra

Fort, Fatehpūr Sikri, Mankameshwar Temple, Guru ka Tal, Jama Masjid, Chini ka

Rauza, Ram Bagh, Mariam's Tomb, Mehtab Bagh, Keetham Lake, Mughal Heritage

Walk, The Cathedral of the Immaculate Conception.

Agra urban agglomeration consists of Agra Municipal Corporation and Agra

Cantonment Board. The spatial area of Agra Municipal Corporation is spread over

120.57 sq. km and an area of about 20 square km falls within the Cantonment Board

and Swami Bagh and Dayal Bagh municipalities. The entire area of the Corporation

is divided into 90 electoral wards, while for the purpose of revenue collection the

area of Agra Municipal Corporation has been divided into eight divisions. Each of

these divisions has been further divided into several zones. The eight divisions are

Hariparvat, Lohamandi North, Lohamandi South, Rakabganj, Chatta, Kotwali, Ward

No. 7, and Tajganj. The local government is constituted by Agra Municipal

Corporation, Agra Cantonment Board and Dayal Bagh and Swami Bagh Nagar

Panchayats. The Administration, Engineering and Lighting, Accounts, Health, and

Revenue departments of Agra Municipal Corporation carry-out various governance

functions. Apart from the municipal administration, a government level urban

development authority, named the Agra Development Authority, is in place to

provide quality housing to the local people at an affordable cost. Service delivery

mechanisms for providing basic services like health, education, shelter etc. are more

easily accessible to city residents (non slum residents), whereas most slum dwellers

do not meet the minimum requirements as they do not have access to the basic

amenities.

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The city regularly faces severe power breakdowns, ranging from 4 to 6 hours

per day. Additionally, there is a severe shortage in water supply. Studies reveal that

every day there is a shortage of 50 million litres of water, and about 40% of total

water supply losses occur during transmission. The water supply suffers from low

water quality, contamination, and shortages. The sewerage network covers only 30%

of the city area; thus, 70% remains uncovered by the sewerage network. Water

quality in the Yamuna River is poor due to industrial and sewerage discharge. About

24 drains directly discharge effluents and sewage into the river. Furthermore, the

solid waste management in the city is very poor. Uncollected solid waste amounts to

450 t/day. The situation is the worst in the Petha industry area. The total air

pollution in the city from domestic sources, diesel generators (D.G.) sets, industrial

sources, Petha units, and vehicular sources is 51 t/day. The unreliability of the

electricity supply has resulted in a large number of D.G. sets being used, which in-

turn has considerably increased air pollution. The city's poor Infrastructure gets

overloaded during the festival season when the daily tourist inflow reaches about

80,000 to 100,000, resulting in various environmental problems.

Demographic Profile

The total population of the Agra urban agglomeration (which includes

Cantonment areas, Swamibagh and Dayalbagh) is 1,331,339; whereas the city

population is about 1,275,000. The city is now growing in the western direction,

following the Delhi-Agra corridor in a linear pattern. The decennial growth rate of

Agra city (1991-2001) is 40.66%, which is twice the national decennial growth rate

of 21.34%. The population density of Agra is 897 persons per square km as

compared to the national Indian average of 324. These data indicate the immensely

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overcrowded conditions in the city. As per the 2001 census, the sex ratio of the city

was 846 females per 1000 males (Indian average is 933). It is worthwhile to mention

that the city has registered an approximate six-point decline in the sex ratio during

the last decade (852, 1991). The literacy rate in Agra is around 70%. Agra city is

predominantly a heritage city, famous for its secular and Sufi leanings. Eighty-two

percent of the local population is of the Hindu religion, 15% are Muslims, 1% Jains

and the remaining 2% are Sikhs, Christians and others. The population comprised of

55% Males and 45% Females. Caste wise majority is of Scheduled Caste (SC)

population, which is 21.5% of the total. The population of 0-6 years constitutes

13.53% of the total and the sex ratio in this age group is around 900.

5.2 Aligarh Municipal Corporation

Aligarh, with a population of 2.99 million, is one of seventy districts in Uttar

Pradesh (U.P.) and is located at 27.30 N latitude and 79.40 E longitude in the

western part of U.P. Aligarh is situated at a distance of about 131 Km (81 Miles) on

the plain between the Ganges river and the Yamuna. The city is the administrative

headquarters of Aligarh district, Aligarh police range and Aligarh division, which is

comprised of the Etah, Hathras (Mahamayanagar) and Kanshi Ram Nagar districts.

It shares common boundaries with the district of Bulandshahr in the North, Etah in

the East, Mathura in the west and Hathras (Mahamaya Nagar) in the south. The

history of Aligarh dates back to the 12th Century A.D, when the Aligarh town and

fort were held by the Tomar rulers (the city was known as Koil). After that, the

fortress was captured by Muslim rulers. Later, it was passed to Turk and Afghan

kings and was renamed from Koil to Aligarh. The Jats subsequently took over the

city from the Afghans, after which it was taken by the Marathas and finally by the

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Britihers in 1804. In 1920, the Aligarh Muslim University was founded. Aligarh

Municipal Corporation was formed in 1975 and the Aligarh Development Authority

came into existence in 1981.

Aligarh is well connected to the rest of country by rail and road transport, as

it is located on the Delhi-Calcutta Railway and Grand Trunk Road route. The

National Highway (NH-91) connects Aligarh to Delhi. Regular buses connect the

city to destinations such as Delhi, Jaipur, Agra, Mathura, Ghaziabad, Varanasi etc.

Aligarh junction is the main railway station, which connects Aligarh to the cities of

New Delhi, Agra, Kanpur, Lucknow, Banaras, Jaipur, Kolkata, Mumbai etc. The

nearest airport is in New Delhi, which is about 130 km from downtown Aligarh.

Aligarh city experiences a tropical monsoon type climate. The summer temperature

varies from 36 to 45 degrees Celsius and winter temperatures range between 5 to 25

degrees Celsius. Aligarh is famous for the Aligarh Muslim University, a premier

central university, Aligarh Fort, Dor fortress, various tombs of Muslim saints, Shree

Varshney Mandir and Mangalayatan. Mangalayatan is known as Asia's largest

pilgrimage location for Jains. Aligarh city is divided into 70 municipal wards and a

mayor is elected based on votes from each ward. The Aligarh Development

Authority is responsible for the planning and development of the city. For purposes

of law and order, the city is divided into three administrative divisions, i.e. City,

Infrastructure and Finance & Revenue, each headed by the District Magistrate. The

District Magistrate has the overall responsibility for the district law and order,

revenue collection, taxation, the control of planning permission and the handling of

natural and manmade emergencies. The city can be divided into four zones,

including the upper kot, Achal tal, the civil lines area, and the peripheral ring. The

upper kot area makes up the core of the city and is primarily occupied by working

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and middle class Muslim population. This area is the most congested part of city

with industries, such as lock, biscuits, dyes and building & fitting that are polluting

the environment. The Achal tal area is inhabited predominantly by Hindus and

include the famous locations of Manik chowk and madar gate (wholesale market).

The Britishers developed the civil lines area, which is a sparsely populated open

area. The land values are high in this area. The peripheral ring around the city has

been recently developed by the private builders ADA & CGHS. This land is being

used for commercial and residential purposes. Based on its development, the city

can be broadly divided into two areas known as Old Aligarh (City) and New Aligarh

(Civil Lines). New Aligarh consists of Ramghat Road, Lal Diggi Road, Anwarul

Huda Compound, Amir Nisha, Azim Compound, Zakaria Market, Dhurra, Sir Syed

Nagar, Friends Colony, Jamalpur, Badar Bagh, Habib Bagh, Bhamola, Zohrabagh,

Dodhpur, Shabitan Compound, Jeevangarh, Kela Nagar, Firdaus Nagar, Janakpuri,

Professor Colony, Prag Sarover, Gyan sarover, Maan sarover, Avantika-1 and 2,

Shyam Nagar, Medical Colony, Lekhraj Nagar, Ramesh Vihar Colony, Durga Wadi,

Marris Road, Vidhya Nagar, Ram Krishna Puram, Sasni Gate and Delhi GT Road.

Old Aligarh contains Rasalgunj or Russellganj, Nai Basti, Avas Vikas Colony, Sarai

Hakeem, Manik Chowk, Delhi Gate, Gular Road, Anona House, Pahasu House,

Sasni Gate, Mahavir Ganj, Railway Road, Saray kawa, Babri Mandi, Mitha Kuan,

Jaiganj, Pathan Mohallah (Afghanan), Kala Mahal, Ghaski Mandi, Upper Kot, Jama

masjid Gambhir, Pura, Mahendra Nagar, Bank Colony (Premier Nagar), Gandhi

Nagar, Saray Sultani, Achal Talab, Khirni Gate, Janak Puri and Vikram colony are

some of the residential areas in old Aligarh. The limited civic amenities are virtually

collapsing due to augmenting pressure of rapidly growing population. The rate of

land consumption for urban purposes was substantially moderate until the 1980s, but

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the 1990s witnessed a sharp increase in land consumption as compared to population

growth. Land consumption for urban purposes in the last 15 years is estimated to be

1.428 km/ year. The city still does not have a sewage treatment plant, and of the

estimated 40 million litres per day of sewage only 27 million litres per day is

pumped out or diverted for irrigation purposes. The remaining sewage pollutes the

urban environment or contaminates ground water resources.

Aligarh has shortfall of basic facilities and housing problems are acute due to

a high rate of population growth. The city has poor infrastructure both in terms of

quality and quantity of domestic water supply. Inhabitants prefer bore wells more

than municipal connection, as it is more reliable in terms of supply. Because of

topography (bowl shaped), stagnant pools and flooding of low-lying areas is quite

common. Sewage and sanitation is for the most part missing. Child labour is the

worst aspect of the city's industries, as children are engaged in lock, brass and metal

works. The electric supply is inadequate compared to the requirements of the city

and is of major concern. Apart from university area and few new settlements, an

overall state of urban comfort is missing.

Demographic & Social Profile

Demographic data for Aligarh city from the 2001 Census has been analyzed

to understand the demographic patterns. The total population of the city is 669,000.

The population consists of 53% males and 47% females. According to the 2001

Census there are 102,000 households and approximately 12% of total population is

under the age of six. The total sex ratio of the district is lower than the city sex ratio

i.e. 862. The literacy rate of Aligarh city was recorded at 63.9% during 2001 census.

About 17% of total population belongs to the SC category. The population of the

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city consists of Hindus, Muslims and Christians. Decadal growth of the Aligarh

district was 39.0 between 1991-01.

5.3 Meerut Municipal Corporation

Meerut city, the head quarter of Meerut District, situated 70 km from Delhi, has

been a place of historical, cultural and administrative importance since the time

immemorial. The city plays a significant role in different areas of economy in the

modern times that includes trade & commerce, tourism & pilgrimage, transportation

& distribution. The city is the gateway to Hastinapur, one of the earliest Indian cities

like Ayodhya, Kashi which was the capital of the Kauravas and Pandavas during

Mahabharata times. Meerut is famously associated with igniting the spark of first

Freedom struggle in 1857 against East India Company, which transformed into a

great revolution later. Meerut cantonment is the place where the movement started.

The entire region around Meerut is dotted with places of religious, tourist and

historical importance, Buddhist and Jain shrines.

Meerut district is the part of upper Gagna-Yamuna doaba, which lies

between 280 47' and 290 18' north latitudes and between 770 7' and 780 7' east

longitudes. On the north it is bounded by Muzaffarnagar district; in the south by

Bulandshahar district while Ghaziabad and Baghpat districts form the southern and

western limits. Ganga River makes its boundary in the east direction and separates it

from the districts of Moradabad and Bijnor. Hindon River makes its western

Boundary in the west and separates it from the Baghpat district. Unplanned

development of the cities marked with the falling far below the norms in terms of

service levels in delivering citizen services. Municipalities/ULBs vested with

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authority to plan and implement infrastructure schemes also lack in co-ordination

among them. These factors are resulting in the falling levels of service delivery.

As per 2001 Census the city of Meerut has attained the status of a

metropolitan city i.e. million plus population city. In exact terms the population was

recorded to be 11.61 lakhs. During the decades 1951-61 and 1961-71, the population

in the city grew by 23.14% and 26.08% respectively against the national growth

rates of 26.14% and 38.23% during the same periods. Between 1971 and 2001, there

has been a rapid increase in population in the city which exceeded over 58% in the

70s, when the population growth in Meerut surpassed the national average. The

increase in population rate during the decade of 1991-2001 was 42.5%, which was

less than that of the previous two decades. It is evident from the above analysis that

the population rate decreased steadily in the recent years. The drop in population

growth in Meerut can be attributed to the development of new housing areas in

several competing towns in the neighboring areas which are indeed equipped with

better and modern infrastructure facilities such as Noida, Ghaziabad, Greater Noida

and Gurgaon. Meerut on the other hand could not continue the phase of

infrastructure development started in late 60’s and 70’s.

5.4 Allahabad Municipal Corporation

Allahabad city, also known as Prayag, is an ancient holy city of India. The city of

Allahabad is situated at the confluence of two sacred rivers, the Yamuna and the

Ganges. The confluence is known as Sangam and is visited by thousands of Hindu

pilgrims every year. Allahabad is among the largest cities of Uttar Pradesh in terms

of population and area. The geographical area of Allahabad is about 62 sq km (under

municipal corporation). Its spatial extension falls at 25°28’ N latitude and 81°54’ E

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longitude. The district of Allahabad is surrounded by the Pratapgarh districts in the

North, district Jaunpur in the Northeast, Sant Ravidas Nagar and Mirzapur in the

east, Kaushambi and Chitrakoot in the west and the state of Madhya Pradesh in the

South. Allahabad has its own domestic airport, Bambruali, which is located 14 km

away from the city. Apart from Indian Airlines, few private airlines also provide

flight services to and from Allahabad. However, nearby cities, i.e. Varanasi (147

km) and Lucknow (210 km) also have airports. Allahabad is well connected by a

network of trains to almost all major destinations throughout the country i.e.

Kolkata, Delhi, Patna, Guwahati, Chennai, Mumbai, Gwalior, Meerut, Lucknow,

Kanpur and Varanasi. Allahabad is located on National Highways 2 and 27. The

government and private bus services are available to and from Allahabad to all

nearby major destinations. From early days of civilization, Allahabad has been a seat

of learning, wisdom and culture. The oldest monument is a pillar (c.242 BC) with

inscriptions from the reign of Asoka. Allahabad served as the capital of the United

Provinces from 1901 to 1949 and the centre of the Indian independence movement

against the British rule, with Anand Bhawan being the epicentre. It was in Allahabad

that Mahatama Gandhi proposed his program of non-violent resistance to liberate

India. Aside from having many prime educational institutions and organizations, the

presence of key government offices gives Allahabad city an important status.

Allahabad is a district administrative headquarter, a cultural centre and a trading

centre. It has a university, museum, High Court of Uttar Pradesh, office of Auditor

General of Uttar Pradesh, office of Principal Controller of Defence Accounts

(Pension) PCDA, Uttar Pradesh, Madhyamik Shiksha Parishad (UP BOARD)

Office, Police Headquarter, Engineering College (MNREC), Medical and

Agriculture College, and the Indian Institute of Information Technology (IIIT). The

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main tourist attractions in Allahabad include: the Sangam; Anand Bhawan; Swaraj

Bhawan; Bharadwaj Ashram; Akshya Vat; Fort; and all Saint Cathedral.

Municipal Corporation of Allahabad (Allahabad Nagar Nigam) is one of the

oldest municipalities of the state. The corporation came into existence in 1864, when

the Lucknow Municipal Act was passed. Administratively, the city municipal area

has been divided into 80 wards and there are 185 documented slums in the city. A

member (the Corporator) from each ward is elected to form the Municipal

Committee. The Corporators elect the Mayor of the city. The chief executive is the

Commissioner of Allahabad, who is appointed by the state government. The

Allahabad Municipal Corporation is incorporated as a special department, which

could function systematically with the aim of providing civic infrastructure facilities

throughout the city. The obligatory functions of the municipal corporation include

ensuring sufficient water supply to all, maintaining and regularly cleaning rivers.

The municipal corporation also undertakes construction of schools and health

centres. In addition, the corporation has undertaken development projects pertaining

to the construction of tube wells, parking spaces and bridges. The Allahabad

Municipal Corporation takes care of all ongoing development in the city. It regulates

property tax rates for different residential and commercial properties. According to

the 2021 master plan, presently about 62% of total city area is occupied under

residential activities, 17% is occupied under transportation related activities, only

7% has been used for the activities related to public and semipublic services and the

remaining 14% of city area is being used for other activities. Based on the status of

development, Allahabad city can be divided into two zones, i.e. underdeveloped

areas and developed areas. Underdeveloped areas of the old City include the Central

Business District or Chowk which is also the economic centre of the city. The

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localities which come under this category are Bakshi Bazar, Atala, Katra, Malviya

Nagar, Atarsuiya, Zero Road and Sahagunj . This area has a high population density

and the market layout is haphazard, with major roads used as both transport

corridors and market streets. Localities such as Civil Lines, Lukargunj, Georgegunj,

Tagoretown and Ashok Nagar are relatively developed areas of the city. The newer

city around Civil Lines area was conceived during the British rule. This area is well

planned based on a grid-iron road pattern with additional diagonal roads. It is a

relatively low-density area with wide tree lined avenues. It houses major educational

institutions, offices, gardens and cantonment areas. The outer growth areas include

satellite towns along major highways passing through city. It also includes city areas

Trans Ganges and Yamuna. The imprints of Britishers and Mughals can be seen in

buildings, gardens and places in Allahabad. The architectural styles reflect a good

mix of western Gothic and Mughal influence. Allahabad is also one of the greenest

city in the state. During the rains many parts of the city face an acute problem of

water stagnation. The city is surrounded by embankments for protection against

floodwater from the river, but these embankments also obstruct the flow of

rainwater. Additionally, the city faces an acute residential problem. According to

Master Plan 2005, presently there is a shortage of 94,000 houses, which is expected

to reach up to 264,000 by 2021.

Demographic & Social Profile

Census data classifies Allahabad city as the 32nd most populous city in India

with the population of 975,000. Allahabad city has a larger household size (6.66)

than that of Uttar Pradesh (6.45), indicating the predominance of the joint family

concept in the city. The city has a relatively poor sex ratio at 807 females per 1000

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males, with the number of males being 539,772 and females 435,621.

Approximately 10% of the total population falls between 0-6 years. The literacy rate

was recorded at 81%, which is slightly better than many other cities of U.P. About

12.4% of the total population belongs to the Scheduled Caste (SCs) category. The

city registered a population growth of about 23% during the last decade. According

to the 2001 Census, the average population density is 16,559 persons per sq. km.

Yet, due to unplanned population growth, the distribution of the density in various

wards is very uneven and varies between as high as 106,254 per sq. km (at Ward No.

34) to 2,515 per sq km (Ward No. 75).

5.5 Expenditure Pattern of Selected Municipal Corporations

In the performance of their functions, governments incur expenditure and have to

find the resources to meet it. Since expenditure and not revenue is the governing

factor in public finance, it is more logical to start with the expenditure side of the

account. It is proposed to study the pattern of and trends in expenditure of selected

municipal corporations of U.P. as the corporations of U.P. have inherited the

strength as well as the weakness of the financial structure of all these selected

municipal corporations, it will be useful to analyze their expenditure and revenue

during the period of 16 years, that is from 1995-96 to 2010-11.

The analysis of expenditure thus, on the face of it, indicates a remarkable

dynamism in the growth of expenditure. This is seemingly fast growing. As is

evident from given table 5.1, the expenditure has increased continuously over the

years. Although in the initial years there was continuous increase in expenditure,

afterwards the annual growth rate is found to be erratic and uneven. In certain years,

the annual percentage increase is found to be not only low but also negative. The

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trend instead of being smooth and upward is found to bumpy with occasional bumps

upward and then registering negative growth rate.

Table-5.1

Growth Trend in the Expenditure of Selected Municipal Corporations

Year Agra (Rs in lakhs)

Aligarh (Rs in lakhs

Allahabad (Rs in lakhs

Meerut (Rs in lakhs

1995-96 1996-97 2374.75

(15.56) 978.05 (10.73)

2298.58 (8.14)

1792.78 (11.39)

1997-98 3287.17 (38.52)

1551.09 (58.59)

2879.03 (25.25)

2099.15 (17.08)

1998-99 3422.16 (4.1)

2027.74 (30.73)

2582.56 (-10.29)

3324.56 (58.37)

1999-2000 4269.25 (24.75)

2584.7 (27.46)

2919.31 (13.03)

3750.31 (12.8)

2000-01 4607.12 (7.91)

2350.03 (-9.07)

3589.87 (22.96)

2338.29 (-37.65)

2001-02 4639.99 (0.71)

2386.08 (1.53)

6910.33 (92.49)

N.A.

2002-03 4481.35 (-3.41)

2915.7 (22.19)

4068.97 (-41.11)

3053.590

2003-04 4479.72 (-0.03)

3085 (5.8)

4322.07 (6.22)

8463.91 (177.17)

2004-05 5004.9 (11.72)

3271.56 (6.04)

4820.31 (11.52)

1682.4 (-80.12)

2005-06 5647.89 (12.84)

3882 (18.65)

5622.04 (16.63)

1808.13 (7.47)

2006-07 6881.58 (21.84)

4312.59 (11.09)

7738.23 (37.64)

3104.65 (71.7)

2007-08 9132.92 (32.71)

5245.97 (21.64)

7684.08 (-0.69)

2491.02 (-19.76)

2008-09 14117.93 (54.58)

7087.96 (35.11)

8226.36 (7.05)

16239.13 (551.9)

2009-10 18940.4 (34.10)

8052.68 (13.61)

19590.29 (138.14)

8056.27 (-50.38)

2010-11 N.A. 7125.35 (-11.51)

N.A. 15174.56 (88.35)

CAGR 13.3 14.7 13.1 Source: Various Budgets of Municipal Corporations of Agra, Aligarh, Allahabad, and Meerut, Uttar

Pradesh

Note: the figure in parenthesis ( ) in table shows percentage growth rate over the years.

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The compound annual growth rates for total expenditure in Agra, Aligarh,

and Allahabad are 13.3%, 14.7%, and 13.1% respectively.

Table 5.2 reveals that while revenue expenditure continuously increased at a

faster rate, the expenditure on capital account increased at a lower rate. It is evident

from the table that the expenditure on revenue account rose noticeably throughout

the period under review except some years. The revenue expenditure increased

6times,9 times, 4 times, and more than 2 times respectively during 1995-96 to 2010-

11 in the municipal corporations of Agra, Aligarh, Allahabad, and Meerut, While the

capital expenditure increased with large ups and downs.

Revenue expenditure has been divided under eighteen heads in the budget of

the municipal corporations of Agra, Aligarh, Allahabad, and Meerut. We have

regrouped these heads in to the three main heads. The three main heads are: 1.

Establishment expenditure (salary, pension, and other establishment expenditure), 2.

Operation and maintenance expenditure on core services (water supply, road, street

light, sanitation and sewerage, drainage, and waste disposal), 3. Other services. The

capital expenditure of the corporations is divided in to the expenditure on

operation&maintenance on core services and other services.

Expenditure on road, street light, water supply, sanitation and sewerage etc.

and the part of the other revenue expenditure which is concerned with

developmental and social services such as grants to educational institutions,

libraries, expenditure on maintaining swimming pools, night shelters etc. non-

developmental expenditure includes general administration and collection of

revenue, repayment of loans and a part of miscellaneous revenue expenditure which

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is related to pensions, provident funds and gratuity to employees, employees

welfare, expenditure on municipal press and reserve for unforeseen charges.

Table-5.2

Percentage Change in Revenue and Capital Expenditure of Agra, Aligarh, Allahabad, and Meerut MCs

Revenue expenditure(Rs in Lakh) Capital expenditure(Rs in Lakh) year Agra Aligarh Allahabad Meerut Agra Aligarh Allahabad Meerut 1994-95 1912.57 776.09 2125.42 1330.56 142.33 107.18 0 278.9 1996-97 1941.39

(1.5) 949.25 (22.32)

2298.58 (8.14)

1560.24 (17.26)

433.36 (204.47)

28.8 (-73.12)

0 232.44 (-16.65)

1997-98 2421.97 (24.75)

1267.99 (33.57)

2879.03 (25.25)

1575.72 (0.99)

865.2 (99.64)

283.1 (882.98)

0 523.43 (125.18)

1998-99 2506.85 (3.5)

1767.21 (39.37)

2454.39 (-14.17)

2172.48 (37.87)

915.31 (5.79)

260.53 (-7.97)

128.17 1152.08 (120.1)

1999-00 3415.47 (36.24)

1891.79 (7.04)

2830 (15.30)

2557.37 (17.71)

853.78 (-6.72)

692.91 (165.96)

89.31 (-30.31)

1192.94 (3.54)

2000-01 3901.08 (14.21)

1853.71 (-2.01)

3583.22 (26.61)

1069.12 (-58.19)

706.04 (-17.3)

496.32 (-28.37)

6.65 (-92.55)

1269.16 (6.38)

2001-02 4210.14 (7.92)

1976.7 (6.63)

5910.33 (64.09)

0 (-100)

429.85 (-39.11)

410.09 (-17.37)

1000 (14937.59)

0

2002-03 4027.72 (-4.33)

2433.89 (23.12)

4068.97 (-31.15)

2031.17 (0)

453.63 (5.53)

481.84 (17.49)

0 1022.42

2003-04 3964.85 (-1.56)

2791.95 (14.71)

4322.07 (6.22)

2523.21 (24.22)

514.87 (13.49)

293.05 (-39.18)

0 260.69 (-74.5)

2004-05 4177.35 (5.35)

2800.2 (0.29)

4820.31 (11.52)

1053.12 (-58.26)

827.55 (60.72)

471.36 (60.84)

0 629.28 (141.39)

2005-06 4754.44 (13.81)

3333.34 (19.03)

5622.04 (16.63)

1305.4 (23.95)

893.46 (7.96)

548.64 (16.39)

0 502.73 (-20.11)

2006-07 6105.98 (28.42)

4051.76 (21.55)

7738.23 (37.64)

2879.33 (120.57)

775.6 (-13.19)

260.83 (-52.45)

0 225.31 (-55.18)

2007-08 6968.75 (14.12)

4845.97 (19.6)

7684.08 (-0.69)

1631.89 (-43.32)

2164.17 (179.03)

400 (53.35)

0 859.12 (281.3)

2008-09 11235.92 (61.23)

6563.25 (35.43)

8219.97 (6.97)

(8258.05) (406.04)

2882.01 (33.16)

524.7 (31.17)

6.39 7981.08 (828.98)

2009-10 12993.76 (15.64)

7181.71 (9.42)

9149.29 (11.30)

3884.51 (-52.96)

5946.64 (106.33)

870.97 (31.17)

10441 (163295.9)

4171.75 (-47.72)

2010-11 N.A

6381.71 (-11.13)

N.A.

3370.42

N.A 743.62 (-14.62)

N.A

11804.14 (182.95)

Source: Various Budgets of Municipal Corporations of Agra, Aligarh, Allahabad, and Meerut, Uttar Pradesh


The following table 5.3 analyses the share of revenue expenditure and capital

expenditure in the total expenditure of municipal corporations of Agra, Aligarh,

Allahabad, and Meerut it can be observed from the table that the share of revenue

expenditure in the total expenditure has declined from 93.07%, 100%, and 82.67%

158

to 68.60%, 46.70%, and 22.21% respectively under the review period in the MCs of

Agra, Aligarh, Allahabad, and Meerut.

Table-5.3

Share of Revenue and Capital Expenditure in the Total Expenditure of Selected MCs


Whereas Aligarh municipal corporation shows a stagnant change.

Correspondingly, the percentage share of capital expenditure to total expenditure of

the selected municipal corporations have increased from 6.92%,0% and 17.32% in

1995-96 to 31.39%, 53.29% and 77.78% respectively, while Aligarh municipal

corporation shows a constant figure. This shows that there was a greater emphasis

on development expenditure since the establishment of the corporations. The greater

emphasis on development expenditure by the corporations may be considered as a

Year Revenue Expenditure (% share) Capital Expenditure (% share) Total Expen-diture (%)

Agra Aligarh Allahabad Meerut Agra Aligarh Allahabad Meerut

1994-95 93.07 87.86 100 82.67 6.92 12.13 0 17.32 100

1996-97 81.75 97.05 100 87.02 18.24 2.94 0 12.96 100

1997-98 73.67 81.74 100 75.06 26.32 18.25 0 24.93 100

1998-99 73.25 87.15 95.03 65.34 26.74 12.84 4.96 34.65 100

1999-00 80.00 73.19 96.94 68.19 19.99 26.80 3.05 31.80 100

2000-01 84.67 78.88 99.81 45.72 154.32 21.11 0.18 54.27 100

2001-02 90.73 82.84 85.52 0 9.26 17.18 14.47 0 100

2002-03 89.87 83.47 100 66.51 10.12 16.52 0 33.48 100

2003-04 88.50 90.50 100 29.81 11.49 9.49 0 3.08 100

2004-05 83.46 85.59 100 62.59 16.53 14.40 0 37.40 100

2005-06 84.18 85.86 100 72.19 15.81 14.13 0 27.80 100

2006-07 88.72 93.95 100 92.74 11.27 6.094 0 7.25 100

2007-08 76.30 92.37 100 65.51 23.69 7.62 0 34.48 100

2008-09 79.58 92.59 99.92 50.85 20.41 7.40 0.07 49.14 100

2009-10 68.60 89.18 46.70 48.21 31.39 10.81 53.29 51.78 100

2010-11 0 89.6 0 22.21 0 10.43 0 77.78 100

159

healthy trend, though the true picture will be revealed only after analyzing the

expenditure on major heads.

The absolute increase in capital expenditure has been quite considerable. The

reason for this is the rise in the cost of administration and revenue collection and an

increase in the amount of repayment of debt (including interest).

Per Capita Expenditure

The per capita analysis of municipal development expenditure brings to light glaring

disparities between the levels of development expenditure in different local bodies

and in the same service provided by each of them. The period under review was

marked by price spiral and population explosion.

Table-5.4

Per Capita Expenditure of Selected MCs

Year Agra Aligarh Allahabad Meerut 1995-96 199.89 161.18 244.58 186.06 1996-97 222.98 172.8 259.43 200.75 1997-98 297.75 265.14 318.82 226.2 1998-99 298.87 335.16 280.71 354.95

1999-2000 359.97 412.89 311.22 376.91 2000-01 374.56 363.21 375.50 226.79 2001-02 363.92 356.66 708.75 0 2002-03 339.23 421.95 409.76 276.34 2003-04 327.22 432.07 427.08 739.2 2004-05 352.7 442.7 467.08 141.85 2005-06 383.94 508.11 534.41 147.24 2006-07 451.5 546.58 721.84 244.26 2007-08 578.03 642.88 703.67 189.14 2008-09 861.9 839.8 739.11 1190.55 2009-10 1115.45 920.3 1726.01 570.55 2010-11 790.82 0 1037.93


160

The two factors neutralised a major part of the increase in expenditure of the

corporations. Table 5.4 gives the per capita expenditure of total expenditure of

municipal corporations of agra, aligarh, allahabad, and meerut.

A close scrutiny of above table 5.4 reveals that the growth in expenditure has

been eaten up by the price rise and population explosion. The per capita expenditure

of municipal corporations of Agra, Aligarh, Allahabad, and Meerut rose from Rs

199.89, Rs 161.18, Rs 244.58, and Rs 186.06 in 1995-96 to Rs 765.23, Rs 790.82,

Rs 1726.01 and Rs 1115.45 in the year 2010-11 respectively. The increase is almost

low considering the length of the period, rise in the expectations of the people for

municipal services and the fact revealed by a recent study in the field of local

expenditure that in case of increase in population, per capita municipal expenditure

has to be raised to maintain the standard of services.

Having studied the trends in expenditure of the municipal corporations of Agra,

Aligarh, Allahabad, and Meerut, we now proceed to compare their expenditure

pattern with each other.

It is revealed by the following table 5.5 that the expenditure on revenue

account of the corporations are increasing at faster rates as compared to the rate of

increase in the expenditure on capital account Among the four corporations selected

for the study, the municipal corporation of Allahabad has the highest per capita

revenue expenditure where as the Municipal corporation of Meerut recorded a

lowest per capita expenditure on revenue account during the period. While on capital

account, the per capita capital expenditure of the Meerut municipal corporation

shows a satisfactory figure among them. The lowest per capita capital expenditure

in the municipal corporations of Agra, Aligarh, and Allahabad indicates a lower

161

expenditure on development work and also the poor quality of services which is

provided by the corporations.

Table-5.5

Per Capita Revenue & Capital Expenditure of Selected MCs

Per Capita Revenue Expenditure Per Capita Capital Expenditure Year Agra Aligarh Allahabad Meerut Agra Aligarh All ahabad Meerut

1995-96 186.04 141.62 244.58 153.82 13.84 19.55 0 32.24

1996-97 182.29 167.71 259.43 174.71 40.69 5.08 0 26.02

1997-98 219.38 216.75 318.82 169.79 78.36 48.39 0 56.4

1998-99 218.93 292.1 266.78 226.06 79.93 43.06 13.93 119.88

1999-2000

287.98 302.2 301.70 257.02 71.98 110.68 9.52 119.89

2000-01 317.16 286.5 374.81 103.69 57.4 76.71 0.69 123.09

2001-02 330.20 295.47 606.18 0 33.71 61.29 102.56 0

2002-03 304.89 352.22 409.76 183.81 34.33 69.73 0 92.52

2003-04 289.61 391.02 427.08 220.36 37.6 41.04 0 22.76

2004-05 294.38 378.91 467.08 88.79 58.31 63.78 0 53.05

2005-06 323.21 436.3 534.41 106.3 60.73 71.81 0 40.93

2006-07 400.39 513.53 721.84 226.54 50.85 33.05 0 17.72

2007-08 441.06 593.62 703.67 123.9 136.97 49.01 0 65.23

2008-09 685.95 777.63 738.54 605.42 175.94 72.16 0.57 585.12

2009-10 765.23 820.76 806.10 275.1 352.21 99.52 919.91 295.44

2010-11 708.29 0 230.53 0 82.53 0 807.39 Source: Various Budgets of Municipal Corporations of Agra, Aligarh, Allahabad, and Meerut, Uttar

Pradesh

The expenditure of the municipal corporations of Agra, Aligarh, Allahabad,

and Meerut on both revenue and capital accounts has increased substantially during

the period under review. This increase has been neutralized by price rise and

population increase and the result is that an increase in per capita expenditure has

been only marginal.

When we study the pattern of expenditure, it gives satisfaction to note that in

the municipal corporations, development expenditure is gaining more importance in

the expenditure structure and its rate of growth is higher than that of non-

developmental expenditure. An increasing trend in non-developmental expenditure

162

was one of the main drawbacks of the financial structure inherited by the

corporations from the erstwhile local bodies. It is evident that this drawback has

been removed by the establishment of the corporation. However it is to be noted that

the absolute increase in non-development expenditure has been considerable. .

Expenditure on Major Heads

There are five major heads on which the municipal corporations allocates and

spends their expenditure .These heads of expenditure along with the proportion of

total expenditure are presented in various tables. A close look at the tables would

reveal that the pattern of expenditure does not give any definite trend over the years

except that a proportion of MCs total expenditure has been spent on water supply,

road, street light, sanitation and sewerage, and drainage. The proportion of

expenditure on other essential municipal services like scavenging, fire brigade,

gardens and open spaces etc. has been allocated as a lower percentage of total

expenditure.

Road has been getting the lion’s share with more than one-fourth of the total

expenditure ever since the inception of MCs.In certain years it has received more

funds than other years, because of rapid growth of urbanization and massive

migration from rural areas to urban areas. So far as the growth in expenditure on

various heads has increased marginal by till 1999-2000, but after 2000 it increased

very fast because of the recommendations of the eleventh finance commission, the

government allocated more fund to MCs for their better performance.

Water supply

The supply of pure and wholesome water to its citizens is an important function of

Municipal Corporations in India. However, revenue from water supply has never

163

been adequate to meet the cost of the service and the corporation has been meeting

the deficit from the general revenue. The following table 5.6 gives the detail of the

per capita expenditure on water supply. The per capita expenditure on water supply

of Meerut Municipal Corporation is higher than the MC of Aligarh, while the water

supply of Agra city and Allahabad is regulated by separate agencies.

The main reasons for the inadequate revenue generated through user charges

by MCs on water supply are, (1) poor collection of its bills, and (2) leakage. The

audit reports for the various years have indicated a large number of irregularities

resulting in poor collection. Leakage of water has tended to worsen the situation.

Table-5.6

Per Capita Expenditure of Water Supply

Year Agra Aligarh Allahabad Meerut 1995-96 0 3.39 0 1.73 1996-97 0 3.05 0 9.86 1997-98 0 6.11 0 4.14 1998-99 0 6.40 0 15.19

1999-2000 0 6.95 0 15.45 2000-01 0 9.95 0 31.46 2001-02 0 11.87 0 N.A. 2002-03 0 15.84 0 49.30 2003-04 0 52.5 0 55.03 2004-05 0 36.09 0 29.94 2005-06 0 15.34 0 45.37 2006-07 0 16.02 0 46.40 2007-08 0 14.95 0 51.43 2008-09 0 21.79 0 50.06 2009-10 0 21.64 0 49.67 2010-11 0 22.30 43.74


The foregoing discussion leads us to conclude that if the municipal

corporations collects its revenue efficiently and plugs the water leakage, it would not

require any subsidy from the general revenue of the corporations.

164

Roads

The expenditure on the development of roads is good investment because it brings

people together and assists commercial and economic activities. Roads are said to be

arteries of a city or a country as the smooth flow of life largely depends upon them.

The construction and maintenance of roads in the area under its jurisdiction is an

obligatory function of the municipal corporations. The engineering department of

the corporation is responsible for the performance of this function.

Table-5.7

Per Capita Expenditure of Road


1999-2000 7.88 45.61 25.14 1.09 2000-01 8.03 20.05 37.76 0 2001-02 4.02 27.53 66.97 0 2002-03 18.5 19.21 75.83 62.63 2003-04 16.49 47.76 83.99 32.06 2004-05 3.36 24.38 89.34 11.88 2005-06 20.32 52.64 104.75 31.7 2006-07 22.32 69.16 203.35 70.09 2007-08 54.88 84.59 156.13 39.62 2008-09 221.52 312.09 183.82 170.61 2009-10 128 199.81 187.50 7.75 2010-11 N.A. 114.17 N.A. 9.93


The expenditure on roads has constantly been increasing during 1995-96 to

2010-11. Above table 5.7 shows the growth of expenditure in terms of per capita on

the construction and maintenance of roads. Laying of new roads generally involves

borrowed funds, while the maintenance and widening of the old ones is provided

165

from the general revenue. It is clear from table above 5.7 that, after some

fluctuations in earlier years, the per capita expenditure on roads has recorded a

definite upward trend.

Though, among all the four municipal corporations, the Allahabad has

recorded a highest per capita expenditure on roads. There are three main reasons for

the increase in the expenditure on the roads; (1) laying of new roads (2) increased

surface area which has to be maintained regularly; (3) manifold increase in the cost

of construction and maintenance during the period under review. The audit reports

have pointed out that the funds provided for the roads are not properly utilized. As

non-completion of the work was a clear case of breach of contract, the corporation

was entitled to recover damages. They should not have only recovered the amount of

damages but also blacklisted the contractor. The administration is also guilty of

extraordinary delay in cancelling the contract.

Besides, the roads are not properly maintained. They become worse with

every monsoon. Inadequacy of funds and their improper utilization are the reasons

for such a situation. Increased funds and their proper utilization are required for

improving the network of roads in the corporation area.

Street lighting

Public lighting is an important aid to civic life. The main object of public lighting is

to ensure the safe use of roads by vehicular and pedestrian traffic during the hours of

darkness. However, this is only one of the many advantages to be gained; others

included protection of property from criminals and the lighting up of recreational

places such as parks and gardens. Provisions of public lighting are an obligatory

function of the municipal corporations of Agra, Aligarh, Allahabad, and Meerut. The

166

following table 5.8 presents the trends in expenditure in terms of per capita

expenditure of selected MCs on public lighting.

It is clearly evident from the table 5.8 that the per capita expenditure of all

selected MCs have increased under the review period. The table also reveals that

except Allahabad municipal corporation, the remaining three MCs shows a lower

per capita expenditure. The main reasons for the increase in expenditure on street

light are; (1) increased cost of energy, and (2) switchover from incandescent lamps

to fluorescent and vapour lamps.

Table-5.8

Per Capita Expenditure on Street Light


1999-2000 6.01 2.67 3.98 1.65 2000-01 1.89 3.44 6.69 5.84 2001-02 5.28 3.68 15.69 0 2002-03 2.62 1.35 14.19 6.11 2003-04 2.25 3.49 15.31 19.53 2004-05 4.13 2.9 15.01 25.58 2005-06 8.87 2.79 19.48 5.97 2006-07 20.28 2.3 55.97 7.34 2007-08 10.24 4.12 45.78 9.74 2008-09 33.02 6.17 25.15 10.76 2009-10 38.42 6.57 20.26 9.8 2010-11 0 8.86 0 8.5

Source: various Budgets of Municipal Corporations of Agra, Aligarh, Allahabad, and Meerut, Uttar Pradesh

The public lighting service is often criticized by the public through the

press. The general complaints are non-replacement of burnt out lamps and non-

switching on of lights, these result in inconvenience to the people. Also, quite often

167

we come across reports of lamps remaining switched on during the day time which

results in wastage of valuable energy. With a little more care and attention towards

the grievances of the public and with a watchful eye on the utilization of funds, the

corporation can provide much improved public lighting service to its people.

Sanitation & sewerage

Maintenance of sanitation is the primary duty of any local government. Proper

sanitation is one of the preventive methods for checking the spread of various

diseases. Improved sanitary conditions contribute a lot towards general efficiency,

and keep the cities and towns fit for human habitation. There are varied aspects of

sanitation, namely drainage conservancy, scavenging, provision of public latrines

and urinal.

Important sanitary services of municipal corporations of Agra, Aligarh,

Allahabad, and Meerut are removal and disposal of refuse, street cleaning, drainage,

and provision of public latrines and urinal. The corporation has a large force of

sanitary staff equipped with various types of equipment such as wheel-barrows,

trucks and bulldozers for leveling the refuse at dumping grounds. The corporations

are spending increasing amounts on their sanitation services year after year. It is

evident from the following table 5.9 that the per capita expenditure on sanitation and

sewerage is very low in all selected municipal corporations and only Agra Municipal

Corporation shows a higher per capita expenditure on sanitation and sewerage. On

the other hand the per capita expenditure on drainage is also not satisfactory. Out of

four municipal corporations, the per capita expenditure on drainage is high only in

Aligarh and Meerut Municipal Corporation.

168

Table-5.9

Per Capita Expenditure on Sanitation and Sewerage


1999-2000 0.94 0.39 0.67 0.91 2000-01 12.90 0.44 1.01 4.86 2001-02 21.92 1.43 1.33 0 2002-03 18.30 1.89 0.35 1.45 2003-04 19.37 1.89 0.35 2.51 2004-05 23.09 1.96 1.23 1.55 2005-06 22.57 3.55 1.02 2.06 2006-07 29.57 2.82 1.70 2.37 2007-08 43.30 4.45 1.25 1.87 2008-09 59.74 4.88 1.90 3.78 2009-10 80.77 3.94 0.95 5.80 2010-11 0 2.51 0 6.50


The sanitary conditions nevertheless in the area under the jurisdiction of the

corporations are far from satisfactory. There appears to be a progressive

deterioration in this respect. The city areas have become filthy and stinks owing to

heaps of garbage lying in the streets which are not removed for days together. The

reasons for such a situation are the attendance records of the sanitary staff are not

properly maintained. The various equipments also are not fully utilized. About one-

third of refusal-removed trucks remain off the road. Lack of civic and sanitation

consciousness of the people is also, to some extent, responsible for the poor sanitary

conditions. People were not at all interested in the problems of public health. They

are not sanitation minded.

169

Table-5.10

Per Capita Expenditure on Drainage

Year Agra Aligarh Allahabad Meerut 1995-96 0.37 0.43 0.29 0.83 1996-97 4 0.22 0.32 1.14 1997-98 6.33 5.14 2.83 1.45 1998-99 5.05 9.41 0.23 3.98

1999-2000 2.79 3.68 0.11 0.83 2000-01 0 2.02 0.41 8.22 2001-02 0 0 0.41 0 2002-03 0 4.84 0.20 8.82 2003-04 0 1.24 0.21 40.4 2004-05 0 0 0.39 18.75 2005-06 0 7.56 0.52 19.56 2006-07 0 24.13 0.69 16.9 2007-08 0 87.48 0.68 21.22 2008-09 0 7.45 0.74 23.1 2009-10 0 0 1.11 26.59 2010-11 0 0 0 18.74 CAGR


The table 5.11 shows that there is no expenditure on waste disposal in all

four municipal corporations except Aligarh. Where from 2008-2010, there is some

expenditure on this heads.

It is clear from the above discussion that owing to administrative weaknesses

and lack of sanitation consciousness on the part of the people, the sanitary

conditions in the corporation’s area are deplorable in spite of increased spending. To

correct this it is desirable that proper attendance records be maintained and regularly

checked, that the equipments be properly used and serviced and the stores be

properly controlled.

170

Table-5.11

Per Capita Expenditure of Waste Disposal

Year Agra Aligarh Allahabad Meerut 1995-96 0 0 0 0 1996-97 0 0 0 0 1997-98 0 0 0 0 1998-99 0 0 0 0

1999-2000 0 0 0 0 2000-01 0 0 0 0 2001-02 0 0 0 0 2002-03 0 0 0 0 2003-04 0 0 0 0 2004-05 0 0 0 0 2005-06 0 0 0 0 2006-07 0 0 0 0 2007-08 0 0 0 0 2008-09 0 43.22 0 0 2009-10 0 40.93 0 0 2010-11 0 47.15 0 0


These are the minimum measures required to be taken to rid the city of its

garbage-heap image. The discussion also indicates that the expenditure on these

services is very low and due to this the quality of services which is provided by

municipal corporations are very poor. Thus, there is a need to huge investment in

these services by state government as well as local governments.

Miscellaneous

A large number of social services provided by the corporations, which individually

involve small funds, have been grouped under this head. Besides, the expenditure on

small development works is also included under this head. The social service include

promotion of cultural and sports activities, construction and maintenance of

171

swimming pools and stadia, construction of community halls, running of community

centres and reading rooms, providing old age pensions to the

Table-5.12

PCE on Other Services of MCs of Agra, Aligarh, Allahabad, and Meerut


1999-2000 11.48 22.93 19.01 6.13 2000-01 57.86 27.24 26.45 1.68 2001-02 66.25 28.75 229.51 0 2002-03 52.36 73.98 26.19 1.62 2003-04 55.76 44.09 23.31 3.31 2004-05 34.46 75.04 22.78 1.06 2005-06 28.88 137.88 21.63 1.62 2006-07 36.03 -0.43 26.36 1.70 2007-08 55.64 97.34 21.68 0 2008-09 71.35 37.09 51.02 2.162 2009-10 60.23 40.07 51.88 2.155 2010-11 23.65 2.712


poor, maintaining night shelter homes for pavement dwellers. Constructing and

maintaining tourist camps, etc. the corporations also gives grants-in-aid to the

voluntary organizations providing such services. The per capita expenditure on other

heads has been given in the above table 5.12, it is evident from the table that among

the four selected MCs the three MCs namely, Agra, Aligarh, and Allahabad shows a

higher per capita expenditure on other services except Meerut municipal

corporations where the per capita expenditure on other services is very low. The

result is that today the corporations provide a fairly large number of such services

which were not provided by the erstwhile local bodies.

172

The analysis of patterns of expenditure of the four municipal corporations of

Uttar Pradesh namely Agra, Aligarh, Allahabad and Meerut thus indicates that there

is no definite trend over the years. The expenditures have been fluctuating with a

wide range of variation. This is indicative of lack of any fiscal planning for the

provision of incremental civic services over the years. With the increase in

population, physical area and prices, the expenditure on various civic services

should have shown a progressive rise. In a growing metropolis the expenditure on

different municipal services should progressively increase not only for providing the

basic services for a growing population over a larger physical area but also at a

higher level of services. This has apparently not happened.

5.6 Trends in Receipts of Selected Municipal Corporations

Municipal revenues are counterparts of municipal expenditure. The fundamental

problem of municipal governments is to provide money necessary to meet the cost

of services to be carried out without imposing an intolerable burden up on the

taxpayers and without local bodies becoming unduly dependent upon the assistance

from the government. After having analyzed the expenditure of the municipal

corporations of Agra, Aligarh, Allahabad, and Meerut, it is proposed to study the

trends in and system of revenue of corporations.

The revenue of the municipal corporations of Agra, Aligarh, Allahabad, and

Meerut has been marked by buoyancy almost all along the period under review. The

following table5.13 comprises the yearly data of the percentage change in total

revenue of Agra, Aligarh, Allahabad and Meerut Municipal Corporation of Uttar

Pradesh from 1995-96 to 2010-11. The revenue of these corporations increased from

Rs 2253.86, 893.02, 2178.95, and 1583.13 lakhs in 1995-96 to 16371.82, 6703.89,

173

17873, and 8361.1lakhs in the year of 2009-10 respectively. It is clear from above

table that the receipts of the corporations of Aligarh and Allahabad are increasing at

faster rate in comparison to the corporations of Agra and Meerut.

Table-5.13

Growth Trends in Total Receipts of Selected Municipal Corporations

(Rs in lakh)

Year Agra Aligarh Allahabad Meerut 1995-96 2253.86 893.02 2178.95 1583.13 1996-97 2525.15

(112.03) 1007.59

(12.82) 2379.42

(9.20) 1880.81

(8.80) 1997-98 3416.48

(35.29) 1553.42

(54.17) 2888.18

(21.38) 2395.81

(27.38) 1998-99 3959.93

(15.90) 2455.41

(58.06) 3063.89

(6.08) 3020.77

(26.08) 1999-2000 3413.22

(-13.80) 2233.96

(-9.01) 2788.22

(-8.99) 3678.55

(21.77) 2000-01 4411.22

(29.23) 2542.44

(13.80) 6845.15 (145.50)

4858.36 (32.07)

2001-02 5176.89 (17.35)

2550.5 (0.31)

4044.27 (-40.91)

-100.00

2002-03 4689.59 (-9.41)

3138.54 (23.05)

4364.85 (7.92)

4675.12 (0)

2003-04 4652.24 (-0.79)

3278.9 (4.47)

4989.41 (14.30)

4887.92 (4.55)

2004-05 5416.8 (16.43)

3402.48 (3.76)

5310.85 (6.44)

5023.42 (2.77)

2005-06 7412.9 (36.85)

3999.15 (17.53)

6481.99 (22.05)

5687.62 (13.22)

2006-07 7044.17 (-4.97)

4468.54 (11.73)

7845.69 (21.03)

5433.06 (-4.47)

2007-08 14703.95 (108.73)

6789.76 (51.94)

7937.29 (1.16)

3884.48 (-28.50)

2008-09 12165.89 (-17.26)

5774.81 (-14.94)

16445.2 (107.18)

7923.46 (103.97)

2009-10 16371.82 (34.57)

6703.89 (16.08)

17873.54 (8.68)

8376.1 (5.71)

2010-11 - 7850.76 (17.10)

- 11448.99 (36.68)

CAGR -13.59 14.10 14.28 Source: Various Budgets of Municipal Corporations of Agra, Aligarh, Allahabad, and Meerut, Uttar Pradesh


Above table also reveals that during few years the increase in receipts was

quite substantial while in others it was marginal or even negative. The reason for this

174

is that in some of the years installments of the grants-in-aid and transfer from central

government were not received while in other years, the arrear installments were

received.

Tax and Non-Tax Revenue

The revenue of the corporations may be classified in to two broad categories. (i) tax

revenue, and (ii) non-tax revenue. Tax revenue comes from taxes levied by the

corporations and also from the share of the corporations in central taxes. Non-tax

revenue includes miscellaneous incomes such as rent, fees, tahbazari, etc. non-tax

revenue results in reduced burden of taxation on people. (bhagwan,1983)

The corporations has to levy almost six taxes, (i) property tax,(ii) tax on

vehicles and animals,(iii) theatre tax,(iv) tax on advertisements published in

newspapers, (v) duty on transfer of property, and (vi) tax on the application for

sanction of building plans. In addition the corporations are empowered to levy the

following taxes: (i) tax on professions, trades, callings and employment, (ii)

betterment tax on the increase in urban land values caused by the execution of any

development or improvement work, (iii) tolls, (v) tax on boats,(v) education cess,(vi)

tax on the consumption, sale or supply of electricity. Share in three main taxes,

namely, terminal tax, entertainment tax, and motor vehicles tax constitutes another

significant source of tax revenue. Apart from this, another main source of tax

revenue is water tax. Out of four municipal corporations under study, only Aligarh

and Meerut Municipal Corporations have powers to levy this tax. In the remaining

two municipal corporations the water tax levied by another agencies, namely Agra

Jal Sansthan and Allahabad Jal Sansthan. All the taxes referred to have been

175

statutorily reserved for local use. The incidence of these taxes falls mainly on the

local people.

Table-5.14

Trends in Own Tax and Non-Tax Revenue

Year

Tax Revenue Non-Tax Revenue Agra Aligarh Allahabad Meerut Agra Aligarh Allahaba d Meerut

1995-96 284.22 166.19 203.11 367.95 122.36 62.28 301.00 94.45 1996-97 221.56

(-22.04) 212.69

(27.98) 239.43

(17.88) 484.38

(31.64) 74.11

(-39.43) 122

(95.88) 405.84

(34.83() 72.79

(-22.93) 1997-98 302.33

(36.45) 243.13

(14.31) 273.38

(14.17) 554.82

(14.54) 170.4

(129.92) 160

(31.14) 300.63

(-25.92) 88.12

(21.06) 1998-99 463

(53.14) 296.86

(22.09) 328.27

(20.07) 532.85

(-3.95) 330.67

(94.05) 180.99

(13.11) 362.17

(20.47) 137.86

(56.44) 1999-2000 331.99

(-28.29) 357.61

(20.46) 434.89

(32.47) 658.54

(23.58) 410.6

(24.17) 149.85

(-17.20) 438.09

(20.96) 252.52

(83.17) 2000-01 387.12

(16.60) 459.03

(28.36) 681.1

(56.61) 649.93

(-1.30) 247.17

(-39.80) 330.02

(120.23) 867.6

(98.04) 405.31

(60.50) 2001-02 874.09

(12.79) 439.75

(-4.20) 634

(-6.91) NA 215.45

(-12.83) 275.86

(-16.41) 544.28

(-37.26) -100.00

2002-03 519.92

(-40.51) 796.4(

(81.10) 682.8

(7.69) 895.46 474.93

(120.43) 281.3

(1.97) 701.05

(28.80) 220.91

2003-04 742.45

(42.80) 602.48

(-24.34) 1292.8

(89.33) 969.45

(8.26) 291.58

(-38.60) 604.11

(114.75) 701.61

(0.07) 441.96

(100.06) 2004-05 1180.39

(58.98) 866.68

(43.85) 1093.45

(-15.42) 949.54

(-2.05) 332.59

(14.06) 511.9

(-15.26) 722

(2.90) 327.82

(-25.82) 2005-06 646.35

(-45.24) 1060.08

(22.31) 1293.55

(18.29) 1021.01

(7.52) 286.9

(-13.73) 828.18

(61.78) 1338.44

(85.37) 203.82

(-37.82) 2006-07 888.48

(37.46) 1085.5

(2.39) 1318.5

(1.92) 946.35

(-7.31) 391.85

(36.58) 717.32

(-13.38) 1122.19

(-16.15) 213.55

(4.77) 2007-08 3646.85

(31.45) 1443.65

(32.90) 1320.5

(0.15) 1135.4

(19.97) 360.5

(-8.00) 632.44

(-11.83) 1186.79

(5.75) 154.53

(-27.63) 2008-09 1859.68

(-49.00) 1193.5

(-17.32) 1441

(9.12) 1171.2

(3.15) 374.07

(3.76) 1140.79

(80.37) 836.02

(-29.55) 1022.57

(561.72) 2009-10 2038.05

(9.59) 1263.55

(5.86) 1671

(15.96) 1309.75

(11.82) 664.76

(77.71) 1085.76

(-4.82) 929.93

(11.23) 1753.8

(71.50) 2010-11 1281.17

(1.39) 1762.35

(34.55) 1240.27

(14.23) 2561.33

(46.04) CAGR 17.71 16.80 16.96 9.65 20.66 10.06



Receipts from both direct and indirect taxes comprise the total tax revenue.

There is no unanimity regarding the basis of classifying the taxes in to direct and

indirect ones. Generally speaking direct tax is one whose entire burden is borne by

the person on whom it is levied, whereas indirect tax is one whose burden partly or

wholly shifted by the person on whom it is levied to some other person or persons.

176

In the present study on practical considerations, property tax, education cess, tax on

animals and vehicles, etc. has all been regarded as direct tax. Tax on advertisements,

duty on transfer of property, tax on consumption, sale on supply of electricity and

share in terminal tax, motor vehicles tax and entertainment tax have been included in

the indirect taxes group.

The following conclusions emerge from a close study of the above table 5.14;

1. The revenue has become more important as it is evident from the table that the

increase in tax revenue is higher than the increase in non-tax revenue. The growth

rate of tax revenue of Agra and Allahabad municipal corporations is higher than the

corporations of Aligarh and Meerut. This is against the sound principle of local

finance under which non-tax revenue is expected to reduce the tax burden of the

people. Substantial contribution by non-tax sources was the only good point in the

financial structure of the erstwhile local bodies inherited by the corporations. It is

quite disheartening to note that over the period this important feature of financial

structure has been watered down.

2. Among the four corporations namely, Agra, Aligarh, Allahabad, and Meerut, only

Meerut Municipal Corporation shows lower tax revenue in comparison to other three

remaining MCs, it indicates the inefficiency of financial administration of

corporation whereas the scenario of tax levy and its collection is poor. In case of

non-tax revenue, the Aligarh and Meerut municipal corporations shows a

satisfactory picture in comparison to Agra, while Allahabad municipal corporations

presents a grim picture.

177

Grants-in-aid

The principle that the grants-in-aid should form one of the important sources of

revenue of local governments has been accepted all over the world. In fact, it is a

device by which the central, state and local governments join together in financing

local services. Certain services such as public health measures, primary education,

maternity, child welfare, etc., are of local character but of national importance.

Central and state governments have assumed the responsibility of these services.

These governments get these services supplied through the local governments under

financial arrangements with them. It is in this sphere that central financial aid to

local bodies plays an important part. It bridges the gap between national

responsibility and local administration. Furthermore, the local functions have been

expanded to the extent that they overreach the local revenue sources and the grants-

in-aid are needed to perform these functions properly (Bhagwan, 1983)

The following table 5.15 shows the amount of grants-in-aid received by the

municipal corporations of Agra, Aligarh, Allahabad, and Meerut during various

years and also the percentage share of grants-in-aid to the total revenue of the

corporations. it is evident from the table that out of four municipal corporations only

two corporations; Agra and Allahabad shows a continous trend.

The conclusion that emerges from the discussion in the above paragraphs is that

the amount of grants-in-aid needs to be augmented. The corporation should furnish

necessary details to the government for a timely release of the grants. This measure

is likely to contribute a substantial amount of revenue to the corporation. The

government also should be generous in the matter of grants.

178

Table-5.15

Growth and Share of Grants in the Receipts of Selected MCs

Grants-in-aid (Rs in lakh) % share of total receipts Year Agra Aligarh Allahabad Meerut Agra Aligarh All ahabad Meerut

1995-96 1847.28 597.55 1674.84 1077.00 81.96 66.91 76.86 68.02

1996-97 2229.48

(20.68) 660.5

(10.53) 1734.15

(3.54) 1270.13

(17.93) 88.29 65.55 72.88 67.53

1997-98 2817.12

(26.35) 1013.73

(53.47) 2210.63

(27.47) 1752.87

(38.00) 82.45 65.25 76.54 73.16

1998-99 751.69

(-73.31) 756.82

(-25.34) 347.79

(-84.26) 107.1

(-93.89) 18.98 30.82 11.35 3.54

1999-2000 291.19

(-61.26) 587.59

(-22.36) 97.8

(-71.87) 99.93

(-6.69) 8.53 26.30 3.50 2.71

2000-01 3174.32

(990.11) - 2173.54

(2122.43) 869.32

(769.92) 71.96 0 31.75 17.89

2001-02 3194.10 (.62)

- 250

(-88.48) - 61.69 0 6.18 -

2002-03 3090.01

(-3.25) - 281

(12.4) - 65.89 0 6.43 0

2003-04 3097.85

(0.25) - 260

(-7.47) - 66.58 0 5.21 0

2004-05 3828.75

(23.59) - 260

(0) 98.65 70.68 0 4.89 1.96

2005-06 6358.52

(66.07) - 450

(73.07) - 85.77 0 6.94 0

2006-07 5319.46

(-16.34) - 550

(22.22) - 75.51 0 7.01 0

2007-08 10187.21

(91.50) - 530

(-3.63) - 69.28 0 6.67 0

2008-09 8973.99

(-11.90) - 8416

(1487.92) - 73.76 0 51.17 0

2009-10 13087.75

(45.84) - 8533.1

(1.39) - 79.94 0 47.74 0

2010-11 - 4.5 - - - 0.05 - 0

CAGR



Loans

In modern times local governments undertake many big developmental programmes

which involve large capital outlays and confer benefits on the people for a number

of years. No local government can ordinarily finance such development projects

available for a long period; it is desirable that the burden of such expenditure should

179

be spread over a number of years. Hence debts are incurred to meet the cost of such

development programmes.

In the case of Uttar Pradesh, on the recommendation of the first state finance

commission, the state government took a decision that the loans advanced to urban

local bodies by state government which were of non remunerative nature, like loans

for water supply schemes, integrated urban development schemes, special and

general component plan schemes for scheduled castes and schedule tribes, integrated

development of small and medium towns, and were outstanding as on march 31,

1997, together with interest thereon have been converted in to grants. The

commission has been informed by the directorate of local bodies that this decision of

the state government could not be implemented fully owing to non-availability of

details in respect of outstanding loans. This information has been asked from all

urban local bodies by the directorate. In the light of the above mentioned decision of

the state government loans which were outstanding on 31-03-1997 stood converted

in to grants. Thus the loan liabilities of urban local bodies as on march 31, 1999

would be confined only to the loans taken by them during the years 1997-98 and

1998-99 (SSFC, UP, 2002).

Transfers from the Higher to Lower Tiers of Government

Transfers from the higher to lower tiers of governments are an outstanding, and

perhaps the most significant feature of public finance and instrumental in making

local financial adjustments. Transfers form an important component of the revenue

base of municipalities although the importance of transfers varies between states and

often between municipalities within the same state. As a proportion of municipal

governments revenues, transfers are high or low, depending on the revenue raising

180

powers of municipalities, the efficiency with which these are used, and of course,

the spending responsibilities of municipal governments. A tax on the entry of goods

into a local area for consumption, use or sale therein (octroi) makes a phenomenal

difference to the role of transfers in the finances of municipalities. Many of the

transfers are not possible to be separately accounted for, as these are absorbed

directly into state government expenditures.

Table-5.16

Growth and Share of Central Transfers in the Receipts of Selected MCs

Year Central transfers (Rs in lakh) % share to total receipts

Agra Aligarh Allahabad Meerut Agra Aligarh Allahabad Meerut

1995-96 0 0 0 0 0 0 0 0

1996-97 0 0 0 0 0 0 0 0

1997-98 126.63 61.56 103.54 0 3.70 3.96 3.58 0

1998-99 126.63 (0)

61.56 (0)

103.54 (0)

114.35 3.19 2.507 3.37 3.78

1999-2000

126.63 (0)

61.56 (0)

103.54 (0)

228.69 (99.99)

3.709 2.755 3.71 6.21

2000-01 0 61.56 (0)

103.54 (0)

0 0 2.42 1.51 0

2001-02 0 68.91 (11.93)

115.99 (12.02)

0 0 2.701 2.86 N.A

2002-03 0 161.58 (134.47)

200 (72.42)

300.24 0 5.14 4.58 6.42

2003-04 0 92.63 (-42.67)

235 (17.5)

172.05 (-42.69)

0 2.82 4.70 3.51

2004-05 0 92.63 0

235 (0)

172.05 (0)

0 2.72 4.42 3.42

2005-06 0 104.84 (13.18)

400 (70.12)

191.38 (11.23)

0 2.62 6.17 3.36

2006-07 0 210.21 (100.50)

1400 (250)

383.73 (100.50)

0 4.70 17.84 7.06

2007-08 0 314.82 (49.76)

1400 (0)

574.69 (49.76)

0 4.63 17.63 14.79

2008-09 0 209.88 (-33.33)

1252 (-10.57)

383.13 (-33.33)

0 3.63 7.61 4.83

2009-10 0 203.18 (3.19)

1539.6 (22.97)

371.73 (-2.97)

0 3.03 8.61 4.43

2010-11 582.74 (186.19)

819.77 (120.52)

7.42 7.16



181

An important feature of transfers to municipalities is the discretionary nature. Unlike

the Constitutional provisions that lay down the revenue-sharing arrangements

between the central and state governments, there exist no statutory provisions in the

state municipal laws which define the conditions under which transfers should take

place from the state governments to municipalities. Since local government is a state

subject and spending responsibilities and taxation powers of municipalities are

determined by state governments, it is assumed that state governments have the

obligation of bridging the gap between what the municipalities are able to raise

by way of taxes, charges, levies, etc. and what they need to administer their

spending responsibilities, with the provision that such a gap is worked out on

sustainable normative considerations and not attributable to inefficiencies and fiscal

profligacy. Transfers are made for other purposes as well.

We provide key statistics that throw light on the role of central transfers in the

finances of municipal corporations. It is evident from the table that the growth rate

of all selected municipal corporation was remains almost same with some minor

fluctuations. The share of all selected municipal corporations namely, Agra, Aligarh,

Allahabad, and Meerut shows an increasing trend, out of four municipal

corporations, the Allahabad municipal corporation shows a higher share of central

transfers to total receipts. The lower share of transfers indicates the inefficiency of

revenue raising of these municipal corporations and also the weak spending

responsibilities of municipal governments.

Transfers from the State Government

State transfers to the municipal governments own revenues of municipalities to

constitute the total fund availability. The fund represents municipal revenue-raising

182

effort on the one hand, and on the other, they comprise what the state governments

consider necessary to transfer in order to enable municipalities maintain and operate

services at some acceptable or normative levels. Transfers have several roles, the

foremost being to bridge the gap, since it would be unusual for the revenue-raising

capacity of municipalities to be perfectly matched with their expenditure needs. In

principle, such vertical gaps are possible to be closed by assigning additional tax

powers to municipalities, or reducing service standards. However, most

governments prefer transfers, which enable municipalities to provide services at

prescribed levels, and also to influence their spending patterns and reduce spatial

inequalities in services. Here, we analyse the role of transfers in a limited way: to

what extent are the state-transfers able to supplement the resources of municipalities

to enable them perform mandated functions and responsibilities. (Mathur, 2006)

The following table 5.17 reveals the situation of transfers from state

governments to municipal corporations of Agra, Aligarh, Allahabad, and Meerut.

Out of four MCs, the Agra municipal corporation received transfers from the state

government only during the two years. The state transfer plays an important role in

the municipal finance in Uttar Pradesh. It is evident from the table that the growth of

transfers rate of all four municipal corporations is not healthy, but the share of

transfers from the state to total receipts of Municipal Corporation is very high. Out

of the three MCs namely, Aligarh, Allahabad, and Meerut, the share of Allahabad

Municipal Corporation is decreasing in comparison to the remaining two MCs.

There are some important features that we note from the following table.

First, transfers are an important constituent of the finances of municipal corporations

183

of Agra, Aligarh, Allahabad, and Meerut. Secondly, the dependency of these

municipal corporations on state is increasing over the years.

Table-5.17

Growth and Share of Transfers from State Government in the Selected MCs

State Transfer (Rs in lakh) % Share to Total Receipts Year Agra Aligarh Allahabad Meerut Agra Aligarh All ahabad Meerut

1995-96 - - 0 - 0 0 0 0

1996-97 - - 0 - 0 0 0 0

1997-98 - - 0 - 0 0 0 0

1998-99 2287.94 1159.18 1922.12 2129.01 57.77 47.20 62.73 70.47

1999-2000 2252.94 -1.53

1077.35 -7.05

1713.9

-10.83 2063.87

-3.05

66 48.22 61.46 56.10

2000-01 - 1295.81 20.27

3020

76.20 2645.98

28.20

0 50.96 44.11 54.46

2001-02 - 1437.96 10.96

2500

-17.21 0

-100.00

0 56.37 61.81

2002-03 - 1713.26 19.14

2500

0 3011.46

3011.46

0 54.58 57.27 64.41

2003-04 - 1808.68 5.56

2500

0 3224.18

7.06

0 55.16 50.10 65.96

2004-05 - 1729.77 -4.36

3000

20.00 3432.35

6.45

0 50.83 56.48 68.32

2005-06 - 2006.05 15.97

3000

0 4219.41

22.93

0 50.16 46.28 74.18

2006-07 - 2340.51 16.67

3500

16.66 3844.42

-8.88

0 52.37 44.61 70.75

2007-08 - 4398.85 87.94

3500

0 636.49

-83.44

0 64.78 44.09 16.38

2008-09 - 3230.64 -26.55

4500

28.57 534.65

-16.00

0 55.94 27.36 6.74

2009-10 - 4078.92 6.25

5200

15.55 4931.8

822.43

0 60.84 29.09 58.87

2010-11 - 4742.08 16.25

- 6305.52

27.85

60.40 55.07



Per capita Receipts of Municipal Corporations

As the period under review has recorded a fast increase in price with a parallel high

rate of population increase, the major part of the increase in revenue has been

neutralized by these two forces. To study the real increase in revenue, it is necessary

184

to analyze the per capita revenue of the municipal corporations of Agra, Aligarh,

Allahabad, and Meerut.

Table-5.18

Per Capita Total Receipts of Selected MCs

(Rs in rupees)


1999-2000 287.79 356.86 297.25 369.70 2000-01 358.63 392.95 716.01 471.22 2001-02 406.03 381.24 414.79 NA 2002-03 355.00 454.20 439.56 423.08 2003-04 339.82 459.22 493.02 426.89 2004-05 381.73 460.41 514.61 423.55 2005-06 503.93 523.44 616.15 463.16 2006-07 461.91 566.35 731.87 427.46 2007-08 930.62 832.07 726.85 294.94 2008-09 742.72 684.21 1477.55 580.89 2009-10 964.18 766.15 1574.76 593.20 2010-11 - 871.33 - 783.10


The above table 5.18 reveals that during the period under review, the per

capita receipts of all selected municipal corporations have increased over the years.

It increased from Rs219.14, Rs 162.95, Rs20.74 and Rs183.02 in 1995-96 to

Rs964.18, Rs766.15, Rs1574.76, and Rs593.10 in 2009-10 of the municipal

corporations of Agra, Aligarh, Allahabad, and Meerut respectively. It is evident that

the population increase has neutralized a major part of the revenue growth and the

real per capita revenue increased only marginally. Above discussion indicates that in

some of the years per capita revenue is higher than the expenditure, but in several

185

years the per capita expenditure is higher than the per capita revenue of MCs. The

growth in per capita expenditure was negligible. The per capita revenue has not been

able to keep pace even at that rate. The conclusion is that the per capita revenue of

the corporations is rising at lower rate than the per capita expenditure.

It will be useful to highlight the important findings of the analysis carried out

in this chapter. The percentage increase of revenue over the period under review is

attractive, but its major portion has been offset by the population and price rise, with

the result that per capita revenue has recorded only a marginal increase. It is quite

disconcerting to note that the increase in revenue is less than the corresponding

increase in expenditure.

The non-tax revenue of the corporations has not increased substantially so as

to relieve the tax burden on the people. The increased progressiveness of the tax

structure gives some satisfaction as the progressive taxes put more burdens on the

rich. In recent years the share of revenue to total receipts has been increasing,

showing that the corporations are making efforts to raise revenue and also indicating

that the government of India is becoming more and more strict in the matters of

grants-in-aid. However, the special problems faced by the corporations, certainly

require generous grants-in-aid from the government. The expenditure of the

corporations is rising at a rapid rate. To meet this rising expenditure, the

corporations should thoughtfully utilize them in order to raise the necessary revenue.

They should also try to tap their non-tax revenue sources and the central government

should provide generous grants-in-aid to them so that they can provide many more

and better services.

186

5.7 Financial Mismatch in the selected Municipal Corporations

The following table 5.19 shows that most of the MCs are generating

revenue surplus and overall resource gaps are not very large except during some

years, where MCs shows a deficit. From 1995-96 to 1998-99 , three MCs namely

Agra, Aligarh and Meerut shows a revenue surplus except Allahabad that shows

revenue surplus in 1996-97, 1997-98 only.

Table-5.19

Fiscal Mismatch in the Selected MCs

(Rs in lakh)

Year Agra Aligarh Meerut Allahabad 1995-96 198.96 9.75 53.53 -26.33 1996-97 150.4 29.54 80.84 88.02 1997-98 129.31 2.33 9.15 296.66 1998-99 537.77 427.67 481.33 -303.79

1999-2000 -856.03 -350.74 -131.09 -71.76 2000-01 -195.9 192.41 3255.28 2520.07 2001-02 536.9 164.42 -2866.06 0 2002-03 208.24 222.84 295.88 1621.53 2003-04 172.52 193.9 667.34 -3575.99 2004-05 411.9 130.92 490.54 3341.02 2005-06 1765.01 117.15 859.95 3879.49 2006-07 162.59 155.95 107.46 2328.41 2007-08 5571.03 1543.79 253.21 1393.46 2008-09 -1952.04 -1313.15 8218.84 -8315.67 2009-10 -2568.58 -1348.79 -1716.75 319.83 2010-11 725.41 -3725.57


The table shows that except during some of the years , all of the four

municipal corporations shows a revenue surplus .at the same time ,it could be

observed that spending by all the municipal bodies is lower than that required for

187

providing a minimum level of civic services .this apparent contradiction of sound

fiscal health and high level of under spending is due to statutory obligations where

by ULBs are generally bound to restrict their expenditure to the resources available

and are also not granted liberal permission by state governments to incur debt.

The revenue surplus of all MCs in many years also due to the low per capita

expenditure on major basic civic services as compared to per capita spending on

core services by all of the four municipal corporations in terms of the zakaria

committee norms. It indicates that the level of under-spending on an average works

out to be high .The per capita expenditure of all MCs on all civic services is very

low as compared to the zakaria committee norms.

Analysis of expenditure and revenue of the local bodies generates the

following broad conclusions:

The municipal corporations inherited a slow growing revenue structure

against the fast increasing population, price level and expectations of the people of

local services. Among the different components of revenue, the tax revenue

increased at the slow rate in comparison to the other transfers from the government.

This indicates slackness on the part of the local bodies in raising revenue and their

increasing dependence on the government funds. One good feature of this revenue

structure was that it was broad-based. Miscellaneous items such as rent, fees, fines,

etc. contributed substantial revenue.

The expenditure pattern inherited by the corporations was marked by a faster

increase of non-development expenditure than that of development expenditure. The

municipal corporations were spending a very large part of their revenue as non-

development expenditure. There were variations in the per capita development

188

expenditure in the different municipal corporations. These variations highlight the

problem of inter-local inequality within the jurisdiction of the corporation which was

an amalgam of these unevenly developed local bodies.

From the above analysis we reject our null hypothesis. It is statistically

proved that the both expenditure and revenue of the municipal corporations have

significantly increased over the period of study. The result shows that there is

positive relationship between expenditure and revenue of the municipal

corporations, but the pace of increment in revenue is lower than the expenditure.

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CHAPTER – V ANALYSIS OF FINANCES OF THE...

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