India
Civic bodies short of cash find it difficult to take on public works; generate only 32% turnover from its own sources: CAG | India News – Times of India
These findings have been highlighted in the Compendium of Performance Audits on the implementation of the 74th Constitutional Amendment by the CAG in 393 ULBs across 18 states including Andhra Pradesh, Assam, Himachal Pradesh, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Rajasthan and Tamil. Nadu between 2014 and 2021. The landmark amendment of 1992 gave these countries constitutional status. self-governing entities and had laid down the provisions for the transfer of 18 functions – including urban planning, regulation of land use and construction, water supply, economic and social development planning and public health – to the urban local bodies.
The auditor has highlighted that the states have shown weak compliance with the “in spirit reading” of the amendment and that only four of the functions transferred to urban local bodies still had “full autonomy” even for thirty years after the law came into effect.
According to the compendium, released this week, the federal auditor found unrealistic budgeting within the ULBs in 13 states, with a maximum budget variance of 403% in revenues and a high budget variance of 274% in expenditure in Himachal Pradesh. The other states with high variance include Odisha, Rajasthan, Punjab, Haryana, Karnataka, Kerala and Telangana.
The CAG also found that civil society organizations in 11 states faced a 42% gap between their own revenue and expenditure. According to the report, ULBs are largely dependent on subsidies as they are unable to generate sufficient resources. On average, subsidies constituted about 56% of the total revenue of the 17 states analyzed by the CAG. It was found that the share of subsidies in the total municipal revenue of states like Uttarakhand, Jharkhand and Tripura was more than 85%. “An increased share of municipal own revenues could have a significant impact on the financial sustainability of ULSGs (read ULBs),” the report said.
According to the report, while property taxes on land and buildings are the mainstay of the ULB’s own revenues, the audit found that while municipal laws have authorized these entities to collect taxes, such as property taxes, powers regarding determination of rates and revision, the procedure for collecting taxes on land and buildings. the collection, method of assessment, exemptions and concessions rest with the state authorities. They also have limited autonomy in the areas of occupational tax, water tax, solid waste management fee and entertainment tax.
“The lack of full autonomy for ULSGs with regard to taxes and user charges limits their ability to adequately increase revenues relative to the costs of operation and maintenance,” the report said.
The report notes that the limited financial autonomy and weak financial management of UBLs appear to result in low resource utilization and that ULBs in eleven states have utilized on average only 61% of available resources, potentially impacting municipal services.
“The CAG compendium is a timely reminder of the urgency to strengthen urban local governments. Hopefully, these audit reports placed in the state legislative assemblies will finally make the agenda of decentralization politically salient in a positive manner. Our cities cannot be effectively governed by state governments and parastatals alone. ULSGs are our first mile government. Also globally, no city in the world offers ease of living and doing business without autonomy and empowerment,” said Srikanth Viswanathan, CEO of Janaagraha, an NGO working on urban governance.
