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Review of the Implementation of 74th Constitutional Amendment Act
A Case of Gujarat
Presented by:
Prof. Madhu Bharti
Ms. Bindu P.
Faculty of Planning and Public Policy, CEPT University
Ahmedabad38 00 09.
APSA 2007, Colombo
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STRUCTURE OF THE PRESENTATION
BACKGROUND
KERALA EXPERIENCE
IMPLEMENTATION IN GUJARAT
STUDY AREA
EMERGING ISSUES
POLICY OPTIONS
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BACKGROUND
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INDIA
Total Population : 1.03 billion (2001)
Urban Population : 28% of total
population
Area : 3179012 sq.km.
Population Density : 324
persons/sq.km.
Total number of States : 35
and Union Territories
Total number of Districts : 593
Total number of Sub Districts: 5564
Total number of Urban : 384
AgglomerationsTotal number of Towns : 5161
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EMPOWERMENT OF LOCAL GOVERNMENT-THE RISING NEED..
350 % increase in urban population over
past four decades.
Projected urban population 410 million by2011 and 550 million by 2021(NIUA 2000)
Unplanned &uncontrolled growth of towns -
immense pressure on ULB
Local governments face difficulties in
meeting their expenditure
15%-95% of state government transfer
discretionary and often distorted.
Need to strengthen governance at local level decentralize to reduce state control
Functional & Financial empowerment of ULB leading to increased local autonomy
URBAN SECTOR GROWTH IN INDIA
0
5
10
15
20
25
30
35
40
45
50
1961 1971 1981 1991 2001
YEAR
%
GROWTH
% of Urban Population to Total PopulationDecadal Urban growth rate(Percent)
THE 74THCAADECENTRALIZATION INITIATIVE IN URBAN INDIA
A national effort aimed at devolution of appropriate functional responsibilities
and the corresponding financial resources to the urban local bodies
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Local Government Finances-Post Amendment Scenario
1991-92 municipal revenues 4.6% of the revenue raised by central government
& 8.05% of state government
2001-2002relative % share of municipal revenue formed 3.07% while state 39.5
% & centre 57.5% respectively.
Municipal share in INDIA GDP is 0.61%(1997-98) & 0.63% (2000-2001)
Goa,Guarat,Maharashtra & Punjab ULBs revenue averages higher than
national averages.
Municipal expenditure average forms 0.75% of the GDP
Average establishment (salaries &wages) 54.2 % while O&M 39.93 % of the
total municipal expenditure
2002-2003 total expenditure of local bodies as % to total (union +state +ULB)
forms 4.7%.In advanced countries local government expenditure usually account for 20-
25 % of total expenditure (Denmark 45%,Finland 41%)
Dependency on state government transfer varies across states,10.1%
punjab,13.82% maharashtra,17.81%gujarat.74.48% Uttar Pradesh,83.33
%Rajasthan
DATA SOURECE:Om Prakash Mathur,Sandeep Thakur,,(2004),India's Municipal Sector -Study For Twelfth Finance Commission.
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PRESENT SCENARIO..A MOVE TO WARDS URBAN REFORMS
2003-2007 TOWARDS URBAN REFORMS..
URIF INITIATED URBAN REFORM PROCESS
Reform of property tax levy
Reasonable user charges
Introduction of double entry system
JNNURM -2006 -2011-ENCOURAGE REFORMS AND FAST TRACKED DEVELOPMENT
Implementation of the 74th CAA
Property tax reform
GIS & MIS applications in Urban Local bodies
THRUST ON IMPROVED URBAN GOVERNNANCE & SERVICE DELIVERY SO THAT THE ULB
BECOMES FINANCIALLY SOUND AND SUSUTAINABLE FOR UNDERTAKING NEW
PROGRAMS
Faculty of Planning and Public Policy, CEPT University, Ahmedabad
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BACKGROUND
The 74th CAA.1992. came into force June 1 ,1993 - ULB Constitutional recognition.
Previously, Entry -5 of the State list-only reference to municipalities
ULB was a complete state responsibiltyAt the time ,weak and inefficient ULB ,the reason being:
Failure to hold regular elections ,prolonged super cession
Inadequate devolution of powers, functions and finance
THE OBJECTIVE OF THIS GREATER DEGREE OF AUTONOMY AND FINANCIAL EMPOWERMENT
WAS TO MAKE ULB EFFICIENT AND VIBRANT DEMOCRATIC UNITS OF SELF GOVERNMENT
- How far have the states adopted the provisions of the 74th CAA?
- How has the ULB functioning mechanism been effected by this amendment?
- Has the ULB been empowered with more powers, functions and resources?
- Has this amendment contributed to greater efficiency and hence greater
development?
More than a decade after the enactment of the Act, in the context ofongoing reform initiatives the question arises:
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AIM OF THE STUDY
To review the implementation of the 74th CAA on the municipal bodies in
Gujarat and assess the impact of the amendment on the performance of the
urban local bodies.
OBJECTIVES OF THE STUDY
Understand the 74th CAA as a step towards empowerment
Study of the existing status of implementation and the various criticalissues involved and assess the implications of the 74th CAA on the
performance of the municipal bodies
Analyze the impact of fiscal empowerment of the municipalities on it
efficiency and the development process and how state-local fiscalrelations have altered after the CAA
To identify and give recommendations on certain methods by which this
amendment can be used as a framework for further development in
the context of ongoing reforms.
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STUDY FRAMEWORK
Review of 74th CAA as a step
towards empowerment
Review post amendment reforms
ULB and their implications.
Broad Study of the implementation
status of the 74th CAAAll India
Review of SFC reports and StateFinance Board reports
Income expenditure details of allmunicipalities in Gujarat 1996-2006
Interviews held with officials of DOM,GMFB, and GUDM
Municipal Budget documents andincome expenditure details 2001-2006Interview held with:Chief executive officers,President of elected council,Secretary,Elected Council Members,Accounts Offices, Chief Engineer, InternalAuditor, Town Planning & Urban Development
Officials.
GAPS & ISSUE IDENTIFICATION
REVIEW OF ONGOING REFORM
INITIATIVES
STATE LEVEL IMPLEMENTATION CHECKGUJARAT
ULB LEVEL CHECK-MUNICIPALITIES OFBHARUCH DISTRICT
Study of Kerala as a
successful example
Discussions with KILA
officials,CEO
& council memberThripunithara municipality
Analyze of the postamendment fiscal scenarioin Gujarat
Ongoing reforms in Gujarat
municipal bodies
LITERATUREREVIEW
DATAANALYSIS
RECOMMENDATIONS & CONCLUSIONS
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74TH CAA.. AT A GLANCE
OBJECTIVES
Set up institutional mechanism to
facilitate decentralization.
Demarcate the role of Urban Local
Bodies and specify their functions.
Ensure representation of all sections
of society, many of which have
been previously under represented.
Ensure that urban local bodies arenot superseded by states.
Regular Elections
Strengthen the financial resource
available to the local bodies,
improve transparency
PROVISIONS PART IX A
OF THE CONSTITUTIONFEATURES OF THE 74th CAA
Article243Q
Article 243 S
Article ZD
Article ZE
Three tier system
Nagar -Panchayat,
Municipal Council,Municipal Corporation
Constitution of
Ward Committees,
District Planning Committees
Metropolitan Planning
Committees.
Article 243W Powers authority and functions
Article 243T Reservation of seats
Article 243U Continuity-five year tenure
Article 243K State Election Commission
Article 243Y
Article 243Z
Article 243X
State Finance Commission
Audit of Accounts
Taxation Powers
Positive implications aimed to achieve.
Political stability
Democratization
Improved Decision Making Process At Local Level
Sustainable Human Development
Adequate representation of weaker section of society
Enhanced People participation
Improved service delivery
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KERALA EXPERIENCE
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Objectives of Kerala decentralization
Improve the quality of investment by allocating resources for priorities fixed locally
Facilitate emergence of local solutions to developmental problems through improved
planning, better implementation, use of traditional knowledge and appropriate
technology etc
Exploit local production possibilities;
Enable peoples participation, leading to keener oversight in the execution ofschemes, followed by better upkeep of assets;
Provide the enabling environment for people to make contributions in kind and cash
for development programs identified by them for priority action;
Bring about a convergence of resources and services to tackle development
problems with greater vigor; and
Unleash public action resulting in a demand-led improvement in the delivery of
developmental and welfare services
THE KERALA DECENTRALISATION EXPERIMENT-A CASE STUDY
Kerala has carried out certain pioneering reforms in the context of decentralized governance.
The state transferred not only of functions and responsibilities, but also the authority
to carry them out, along with resources, both human and financial.
Unconventional & innovative strategy for the decentralization process
Peoples Planning Campaign to set agenda for decentralization
Big Bang Approach to decentralized governance
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The quality of service delivery by local government has not improved to the extentdesired.
Tendency to spread resources thinly with preference being given to every electoral
constituency whenever a development scheme is taken up.
Participatory aspect of planning is often limited to airing of needs and sharing of
benefits.
The flow of bank credit into local schemes has been rather limited resulting more from
bankers reluctance to deal with local governments-thus higher subsidies
KERALA ACHIEVEMENTS & CHALLENGES
The formula based devolution of funds has ensured equitable funds flow
Peoples Participation -designed to facilitate intervention by the interested citizen at allstages of the development process
Wide ranging reformsindependent regulatory institutions like SEC,SFC,OMBUDSMAN,APPELATE TRIBUNALS, STATEDEVELOPMENT COUNCILS,
improved management systems both financial and administrative
enhanced accountability mechanisms performance & social audit
Development matters local governments
Better service delivery-evolved efficient and cost effective mechanismsMandatory Women Component Plan
Poverty reduction-more funds from local government to poverty stricken families
Many local governments have been able to raise public contributions for improvingservice delivery
ACHIEVEMENTS:
CHALLENGES:
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IMPLEMENTATION IN GUJARAT
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GUJARAT
Total Population : 51 Million (2001)
Urban Population : 37% of total population
Area : 196024 sq.km.
Population Density : 260 persons/sq.km.
Literacy Rate : 69.17%
Sex Ratio : 920Total number of Districts : 25
Total number of Towns : 242
Total number of Villages : 18539
Total number of Cities : 27
Major Industries : Chemicals, Petrochemicals, Textiles,
Diamonds, Consumer goods
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GUJARAT
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URBANISATION TRENDS IN GUJARAT
Gujarat urban population increased
three fold from 5.315 million(25.77%) in
1961 to 37.6% 2001
The 2001 urban population-Gujarat is
18.22 millions(37.6%) while India 286.02
million(27.85%)
Gujarat stands among the economically
better states, per capita income Rs.16,998compared to India Rs.14682
MUNICIPALITY CLASS POPULATION NUMBER
A ABOVE 100,000 9
B 50,000 to 100,000 32
C 25,000 to 50,000 44
D 15,000 to 25,000 58
TOTAL MUNICIPALITIES 143
Table 6.4 CLASSIFICATION OF MUNICIPALITIES IN GUJARAT -
2001 CENSUS
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CHECK ON THE STATUS OF IMPLEMENTATION
GUJARAT STATE LEVEL
URBAL LOCAL BODY LEVEL
A CASE OF BHARUCH DISTRICT
MUNICIPALITIES
BHARUCH-CLASS A
ANKLESWAR-CLASS B
JAMBUSAR-CLASS C
PROVISIONS OF
THE 74th CAA
GUJARAT
MUNICIPALITIES ACT 1963
.GUJARAT ACT NO. 34 OF
1964
STATUS OF
IMPLEMANTATION
REFORM
INITIATIVES &
COMMENTS
PROVISIONS OF THE
74th CAA
STATUS OF IMPLEMENTATIONCOMMENTS &
REFORMSBHARUCH
CLASS A
ANKALESWA
R CLASS B
JAMBUSAR
CLASS C
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FISCAL EMPOWERMENT OF MUNICIPALITESA CLOSER LOOK
Review of the Gujarat municipal finances 1996-2006 reveals:
Gujarat-12% total municipal revenues in India after Maharashtra(48%)
Gujarat per capita internal resource Rs.809.4 ranks third after Maharashtra and Punjab.
The cumulative tax income of all the municipalities in Gujarat (2002-2006) to total tax
revenues of the state ranges only 0.58 to .61 percent. Indicates the weak contribution of local
economy to the state, the main reason-the abolition of Octroi in municipalities .
Nearly 75 % of the tax income octroi income prior to its abolition. After octroi abolition
property tax forms the main source of internal revenue .Nearly 52 percent of the total tax
income. Hence focus on property tax for raising revenues.
The octroi income substituted by octroi grant by the state government has increases the
revenue grant component in the revenue income from an average of 13 percent prior to the
abolition of octroi to 60 percent dependency on grant in the revenue income.
The establishment expenditure against revenue income and expenditure increasing at a rate
of 1.04 and 2.4 percent (2003-2006), respectively indicates the need to optimize the resources.
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GUJARAT STATE FINANCE COMMISSION-AREAS OF CONCERN..
1st SFC Report submitted to GOG on 13.7.98
Out of total 73 recommendations, 46 have been accepted completely
12 were accepted partially , 15 were not accepted by the State Government
2nd SFC has been constituted on 19th November 2003. With tenure period of 2 yearsbut extended further. The report awaits final approval.
Certain weak policy aspects of the 1st SFC recommendations that emerge are as
follows
Weak Devolution Model Framework
Absence of Untied Funds
Inadequate Data Base
Lack of Performance Based Devolution of Resources
Lack of Social Audit and Performance Audit
Inadequate Borrowing Policy Framework
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STUDY AREA
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Bharuch as a study case
Rapid increase in economy -golden corridor
High trends of urbanization-rapid industrial developmentHENCE HIGH DEMAND ON BASIC INFRASTRUCTURE PROVISION
Both Bharuch and Ankleswar have signed MOA with StateGovernment specifying timelines for the reforms
MUNICIPALITY CLASS TOTAL POPULATION AREA SQ.KM YEAR OF ESTABLISHMENT
BHARUCH A 148391 17.35 1852
ANKALESHWAR B 67952 8.87 1859
JAMBUSAR C 38771 5.12 1986
%SHARE OF URBAN POPULATION TO TOTAL POPULATION
0.00
5.00
10.00
15.00
20.00
25.00
30.00
1961 1971 1981 1991 2001
YEAR
%
POPULATIO
%SHARE OF URBAN POPULATION TO TOTAL POPULATION jambusar
BHARUCH AS A CASE.
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AREA OF CONCERNTHE WARD COMMITEES
Article 243 S:Constitution andcomposition ofthe ward
committees
The concept notpresented in theexisting Act
Amendment Processprocess is ongoing.
Reform process to ensurecommunity representationand participation ongoing.
State Government currentstatus claim:
Informal system of takingdecision at different level.
The annual plans arediscussed with fellowcorporators and public byand large and their suggestions are incorporatedin the plan before putting itto Standing Committee andGeneral Board.
Gujarat Town Planning &Urban Development Act1976 ensure the community
participation in spatial urbanplanning.
Formation of wardcommittee is in theprocess.
JNNURM REFORM-Area Sabha for
urban areas GOG iswaiting for theguidelines oncommunityparticipation lawfrom GOI andbased on thatappropriate lawwould beformulated.
PROVISIONS OF
THE 74th CAA
GUJARAT
MUNICIPALITIES ACT
1963 .GUJARAT ACT NO.
34 OF 1964
(As modified up to
31stAugust 2006)
STATUS OF IMPLEMANTATIONREFORM INITIATIVES
& COMMENTS
STATE LEVEL
O CO C O O SSTATE LEVEL
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Article 243 X:Power toimpose taxesby and, funds ofmunicipalities
Contain theprovisions in detailas to which type oftaxes a municipalitycan collected.
The present tax anduser chargesdecided by thegeneral body andafter publicapproval, put across
for state governmentapproval.
High political interventioninto the taxation process tobe curbed.
Reform
1.Area based propertytaxation system.
2.Mandatory 85 percent ofO& M cost recovery onservice proved byULB,moving towards 100percent cost recovery
3 Setting up of tax ratesetting commission andfixing tax and user chargerange under process
PROVISIONS OF
THE 74th CAA
GUJARAT
MUNICIPALITIES ACT
1963 .GUJARAT ACT
NO. 34 OF 1964
(As modified up to
31stAugust 2006)
STATUS OF
IMPLEMANTATION
REFORM INITIATIVES &
COMMENTS
AREA OF CONCERNTAXATION POWERSSTATE LEVEL
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TAXATION POWERS AND FINANCIAL OBLIGATIONS IN MUNICIPALITIES-THE ISSUES
Procedure forimposition oftaxes
Municipality shall, by passed at ageneral meeting.The municipality shall publish the rulesso approved with notice.Any objection within a month isconsidered and discussed.Notification proposed in accordanceforwarded to state government.
Political pressure hampers theincrease in tax rates and hike in
user charges.State Government control- If theestablishment expenditureexceeds 45% of expenditure 10 %deduction in establishment grantevery year and certain other grantswith held.
Revision ofTaxes
The state government may bynotification in the official gazetteempower any municipality to levy anytax or to increase or reduce the amountor rate of any tax levied within maximumand minimum limits
empowered to revise their taxrates.No voluntary initiatives to raise theirtax rates came from municipalities(2001-2007)-DOM sourceLack of political will. The stategovernment initiates the process inmonthly review meetings withCEO.
Rate of Tax Not specified
Empowered to decide the taxrates and user charges.Level of autonomy is this respect ishigh but misutilized due to low
political will.Reform initiatives: Base tax rates
would be fixed in the amendedMunicipality Act (process ongoing
COMPONENTS PARTICULARSCOMMENTS
& REFORM INITIATIVES
Existing autonomy hampered by low political will.
Automatically leads the State Government to highly intervene into the localgovernance process to help it sustain.
State Government has to constantly perform a monitoring role to ensure
cost recovery of the service provided
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Article 243 X: Powerto impose taxes byand, funds ofmunicipalities
PropertyWaterVehicleTheatreSpecial feeRental
propertyMarketsSewerageLighting
Revision ofwater taxcase
PropertyWaterVehicleEntertainmentSpecial feeMarket
LightingRentalproperty
Property taxWater taxSewerageEntertainmentSpecialcharges:
Special watertaxCattleShopsProperty salecess
Tax rate &user chargesetting decisions aredirectly taken byelected body
Political pressure veryhigh.
Reform initiative:State governmentplans to set a taxsetting regulatoryauthorityArea based propertytax system processongoing.
PROVISIONS OF
THE 74th CAA
STATUS OF IMPLEMENTATIONCOMMENTS &
REFORMSBHARUCH
CLASS A
ANKALESHW
AR CLASS B
JAMBUSAR
CLASS C
AREA OF CONCERNTAXATION POWERSULB LEVEL
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STATE LEVEL
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Article 243 Z:Audit ofAccounts ofmunicipalities
Audit provided for underthe provisions of theGujarat Local Fund AuditACT, 1963(GUJ.XLIX).
The municipal accountsmay be audited at anytime by the stategovernment
The auditor shall for thepurpose of his office haveaccess to all accounts
and records of themunicipality.
The audit wasconducted by theLocal funds auditteam.
Certain irregularitiesin the existing system(case study)
Reform aiming at
more accountabilityand transparency
1.The local funds audit tobe under the purview ofCAG
2.Mandatory adoption ofdouble entry accounting
system in all urban localbodies basedReality check micro levelreflects irregularities inexisting auditing andalso low level ofcompliance of ULB toaudit team
recommendations.
PROVISIONS OF
THE 74th CAA
GUJARAT MUNICIPALITIES
ACT 1963 .GUJARAT ACT NO.
34 OF 1964
(As modified up to 31stAugust
2006)
STATUS OF
IMPLEMANTATION
REFORM INITIATIVES &
COMMENTS
AREA OF CONCERNAUDIT OF ACCOUNTSSTATE LEVEL
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Article 243 Z: Audit
of Accounts ofmunicipalities
Regular, Once
in every yearlocal fund audit
Irregular.Two yearback log.*
Irregular.One yearback log.*
Level of complianceto therecommendations ofthe audit team hasalso been low.
PROVISIONS OF
THE 74th CAA
STATUS OF IMPLEMENTATIONCOMMENTS &
REFORMSBHARUCH
CLASS A
ANKALESHW
AR CLASS B
JAMBUSAR
CLASS C
* As per information given by accounts division officials in the Municipalities
AREA OF CONCERNAUDIT OF ACCOUNTSULB LEVEL
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CONFORMITY TO THE DEVOLUTION OF FUNCTIONS IN 12TH SCHEDULE
THE TWELFTH SCHEDULE
FUNCTIONS
DEVOLUTION
STATUSCOMMENTS(BASED ON MICRO LEVEL CASESTUDY)
Urban planning including
town planning
GOGdeclared asfullytransferred.
Largely comes under the purview of the town
planning department.
Regulation of land use andconstruction of building
Land use as per the town planning schemes.
Planning for economic andsocial development
Development plans prepared by the Townplanning department.
Roads and bridges
Dependent on the Public Works Department for
Technical sanction-Low Technical capacitybeing the reason for such dependence.
Water supply for domestic,industrial and commercialpurposes
Devolved but projects implemented with the helpof Gujarat water supply & sewerageboard.Techinical competence lacking.
Urban forestry, protection ofenvironment and ecology
Taken care of by municipality, involvement ofNGO prevalent
Safe guarding interest of theweaker section of the societyincluding the handicappedand the mentally retarded.
No other efforts other than representation in theelected council
Slum improvement andupgradation
Largely limited to the execution of centre andstate government schemes.
Urban poverty alleviation No other efforts other than representation in theelected council
AREA OF CONCERN IN THE 12TH SCHEDULE
REVIEW OF THE LOCAL BODY FINANCES
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REVIEW OF THE LOCAL BODY FINANCES
FINANCIAL PERFORMANCE OF CLASS A,B,C MUNICIPALITIES-A COMPARISION
FINANCIAL PERFORMANCE INDICATORS BHARUCH ANKALESHWAR JAMBUSAR
Resource Mobilisation
Share of own source of funds in TotalRevenue Income 34.63 41.21 19.56
Share of Property Tax of funds in TotalRevenue Income 14.97 9.91 8.10
Share of revenue grants (octroi incl) andsubsidies of funds in Total RevenueIncome 65.37 58.79 80.44
Share of revenue grants excludingoctroi grant in Total Revenue Income 25.62 16.61 53.5
Fund Application
Share of establishment to total revenueexpenditure (%) 20.85 42.84 28.86
Share of establishment to total revenueincome (%) 19.98 35.07 18.49
Share of O & M in total revenueexpenditure (%) 72.42 55.57 63.40
Performance Indicators
Operating Ratio 1.02 0.82 0.64
Capital Utilization Ratio 0.31 0.79 1.24** ca ital works onl in 2003-2004
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The share of own source (tax +non tax ) in revenue income is as low as 19.5
percent in Jambusar which is class C ,while Bharuch class A is also only 34
percent.
Octroi grant forms nearly 60 percent of the revenue grant due to which the
percentage share of grant (octroi incl.) is as high as between 58-80 percent.
The average operating ratio Bharuch shows a revenue deficit Ankleswar
,Jambusar less than unity, indicating a revenue surplus.
Average capital utilization ratio in three cases show lack of utilization of
available capital income indicating the low utilization of funds available for
capital works.
Incase of Jambusar over the five year review period only in the year 2003-04, capital
expenditure has been made. This clearly indicates the low level of developmental
activities.
REVIEW OF THE LOCAL BODY FINANCESTHE KEY FINDINGS
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EMERGING ISSUES
EMERGING ISSUES
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High state intervention (reflected from Bharuch,Ankleshwar ,Jambusar case studies)
The discussions held reveals that the state government has direct and strong control over thefunctioning of the local bodies in the following aspects
All the grants are in the form of tied grants wherein the grant is given for specific purpose
Agenda of local priorities set by state .The concept of community involvement lost .
User charges and taxes as decided by the urban local body requires prior ratification.
Access to banks and financial intermediaries for loan requires prior permission to be sought
from the state government .
EMERGING ISSUES
High dependency on grants from state government
Municipality is dependent on state government for both their administrative costs
and capital works.
In order to cover their administrative costs the local body receives a 33 percent
grant and all their capital works are based on state grants and subsidies.
Jambusar - class C reflects high dependency of 59 %on grants in the revenue income whileonly 18 %of the revenue income comprises of the own sources tax and non tax)
Ankleswar - class B and Bharuch- class A the percentage own source of income to total
revenue income is 41 % and 36 % respectively.
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EMERGING ISSUES
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Technical competence & Organizational Capacity
Execution of public works prior technical sanctioning from PWD department (planning dept.
information-case studies)
Implementation of water and sewerage projects-GWSSB
This reconfirms the need for capacity building to make the local government moreautonomous.
High political intervention and lack of public participation
Elected body takes strong control over the most of the decisions of the municipality.
Various committees that are formed completely comprise of the ruling party members and the
decisions are open for discussion only when the general body meetings are held.( information
received from elected body members,Bharuch and Ankleswar
Lack of community involvementdecisions are more politically driven
(We ,the representatives of people know their needs)
Local Planning Initiativestotally dependent on the Town Planning DepartmentTP.schemes
EMERGING ISSUES
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EMERGING ISSUES
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EMERGING ISSUES
Transparency & Accountability
Ankleswar and Jambusar case reveals one year and two year back log for the
audit.
Lack of strict monitoring on level of adherence to the audit recommendations
,hence remains neglected.
Accounting system needs to be transparent and budgetary documents needs tobe given public access
Double Entry process ongoing since one year (as per case studies) Process needs
to be accelerated.
Capacity Building of accounting staff to adopt new system is area of concern.
Public Disclosure Law to be adopted without delay
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POLICY OPTIONS
RECOMMENDATIONS FOR FUTURE POLICY OPTIONS
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RECOMMENDATIONS FOR FUTURE POLICY OPTIONS
The state functioning as a facilitator
Local body should function as autonomous units while state monitors the process.
For increased autonomy the need arises to improve the financial resource base & locallevel capacity building initiatives.
Separate nodal agency to be set up for continuous capacity building initiatives
Improvement of Technical Competency
The recruitment process of technical staff at local level must be made rigid so that thetechnical competency of the staff is ensured.
Capacity building of existing technical staff integration of external experts
Breaking viscous cycle of low performance
The vicious cycle of low financial base, hence low level of service delivery and resultinglack of willingness to pay would result in the local body continuing to sustain on the state
government
Widening tax structureAcceptable tax structure needs to evolve where the citizen are willing to pay for the
good quality service
Faculty of Planning and Public Policy, CEPT University, Ahmedabad
RECOMMENDATIONS FOR FUTURE POLICY OPTIONS
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RECOMMENDATIONS FOR FUTURE POLICY OPTIONS
Efficient resource mobilisation
Focus should be on taxes that yield good revenue and efforts made to make the taxcollection system more water tight.
STATUS OF PROPERTY TAX REFORM IN BHARUCH,ANKLESWAR ,JAMBUSAR
Municipality Existingregisteredproperty
Surveyedproperty
%covered Potential for extratax revenue
Bharuch 43061 36891 85 Ongoing
Ankleswar 19107 20684 107 7%
Jambusar 10023 12244 122 22%
Source:GUDM last updated on 19th December 2006
Rationalization of user charge
User charges for provision of basic services are generally politicized wherein in the localbody is compelled to provide services for free or at negligible cost
Solution would be by fixing the minimum user charges to be levied for various services.
Cost Recovery for service delivery and thrust to cover at least the O&M charges by GOGhead in the right direction and need to be further strengthened.
Faculty of Planning and Public Policy, CEPT University, Ahmedabad
RECOMMENDATIONS FOR FUTURE POLICY OPTIONS
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RECOMMENDATIONS FOR FUTURE POLICY OPTIONS
Community participationa structured framework &expert involvement
Social Accountability to all the actions of the local government and transparency should
be instilled into the system.
Committees should involve non political representation in the form of experts from various
fields, social workers and representatives of voluntary organization.
Well defined framework for the non political inclusion at grass root level so that a
common system could be followed and ensured throughout the state
Introduce sense of competition in ULB
Reduce monopoly in the provision of service by the local body.
Parallel service provider like private players would instill the sense of competition andensure best service
Regular performance checkon the functioning of local bodies and a platform of
comparison among them with certain incentives earmarked for most efficient local bodies.
Faculty of Planning and Public Policy, CEPT University, Ahmedabad
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THANK YOU
Faculty of Planning and Public Policy, CEPT University, Ahmedabad
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AN LOOK INTO THE FINANCES OF ALL MUNICIPALITIES IN GUJARAT
Financial
year
%Tax
income in
Total
Revenue
Income
%Octroi
Income in
total taxincome
% Property
Tax in total
tax income
% Revenue
Grant in total
revenueincome
%Establishment
Expenditure to
revenue expenditure
%
Establishment
Expenditure
against revenue
income
1995-96 72.78 77.76 7.78 12.52 50.07 46.74
1996-97 75.33 77.41 7.88 12.83 52.48 50.12
1997-98 74.65 70.33 7.07 11.55 52.53 46.21
1998-99 72.47 76.77 8.06 14.10 52.55 49.23
1999-2000 71.92 77.16 10.24 15.15 54.58 55.57
2000-2001 69.00 75.22 4.25 19.61 54.03 52.06
2001-2002 32.11 34.99 19.52 55.00 57.91 58.57
2002-2003 22.50 0.00 49.23 66.18 62.47 54.27
2003-2004 27.45 0.00 54.84 61.80 62.47 56.26
2004-2005 24.56 0.00 56.96 63.17 63.12 57.21
2005-2006 22.35 0.00 53.72 64.41 64.14 58.32
Source:GMFB Income Expenditure Tables
Faculty of Planning and Public Policy, CEPT University, Ahmedabad
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LIST OF DISCRETIONARY TAXES & FEES THAT CAN BE LEVIED AS PER GUJARAT
MUNICIPALITIES ACT 1963
LEGISLATION DISCRETIONARY TAXES FEES THAT CAN BE LEVIED
.GUJARAT ACT NO. 34 OF
1964
(As modified up to 31stAugust2006)
Property, vehicles, boats, animals,
motor vehicles, octroi, dogs, special
and general sanitary cess, lighting,sale of cattle in market, betterment
levy
Registration fee, license fee,
swimming bath fee, slaughter
house fee, building constructionfee, shop registration fee, water or
connection fee, cattle pound fee
LIST OF TAXES THAT ARE SHARED BETWEEN MUNICIPALITY & GOG
NAME OF THE TAX THE SHARE GIVEN TO THE URBAN LOCAL BODIES
Non Agricultural Assignment 75 percent of the total amount collected from the municipal area
Land and Revenue
(Agriculture)35 percent of the recovery made during the previous year
Local cess on Land Revenue
and Water Rate
After deduction of the recovery -expenditure 100 percent of the remaining
amount
Education Cess 75 percent of 85 percent on the basis of percentage of recovery provided thatthe responsibilty of the primary education is undertaken ,otherwise 5 percent of
the recovery to the urban local bodies
Entertainment Tax50 percent of the income, though the amount is given as a contribution against
the scheme expenditure through the Municipal Finance Board.