The
study notes that local bodies in India, urban and rural, are yet to be put prominently
on the public finance map of the country, which is needed to facilitate inclusive
economic growth and equitable development.
The size of the
municipal fiscal sector in India is very small compared to that in many developed
and developing countries and in relation to the public services that the urban
local bodies are mandated to deliver. The total municipal revenue in India account
for about 0.75 per cent of the country’s GDP as against a figure of 4.5 per cent
for Poland, 5 per cent for Brazil and 6 per cent for South Africa. In terms of
both revenue and expenditure the urban local bodies account for little above 2
per cent of the combined revenue and expenditure of Central Government, State
Governments and ULBs. This is in contrast to the situation obtaining in advanced
countries, where local bodies normally account for 20-35 per cent of the total
government expenditure and the principle of ‘subsidiarity’ is regarded as a cornerstone
of fiscal federalism. Recent data on municipal finances reveal that the total
revenue of ULBs is growing at a lower rate compared to the growth of combined
Central and State Government revenues. This is reflecting in a further decline
in the existing marginal presence of local public finance in the overall fiscal
structure of India.
The backlog, current and growth needs
of infrastructure in cities and towns far exceed the resources at the disposal
of ULBs. The additional requirement of funds by ULBs to meet the challenges of
urbanisation, congestion, service deficiency and environmental degradation and
to discharge redistributive functions like poverty alleviation and slum development
as envisaged in the Constitution (74th Amendment) Act, is huge. Vertical
imbalance, fiscal dependency, borrowing constraints and inefficiency in municipal
management are affecting the functioning of urban local bodies. They need to be
addressed in a holistic manner through comprehensive reforms.
6.1 Major
Findings of the Study
Some key findings from the study are as follow:
i)
There is mismatch between functions and finances of ULBs, which primarily explains
the vertical imbalance. Out of 18 functions to be performed by the municipal bodies
in India less than half have a corresponding financing source. The 12th Schedule
in the Constitution 74th Amendment Act also envisages that functions
like ‘safeguarding the interests of weaker sections of society, including the
handicapped and the mentally retarded’, ‘slum improvement and upgradation’ and
‘urban poverty alleviation’ belong to the legitimate functional domain of urban
local bodies. However, there are no commensurate resources with these institutions
to discharge these functions.
Thus, vertical imbalance is
constitutionally in-built and correction to the same needs to be achieved through
reforms in the structure of fiscal federalism, including revenue assignment and
inter-governmental transfers through the Central and State Finance Commissions.
There is a need for function-finance mapping to ensure that each function to be
performed by the ULBs is backed by a corresponding financing source. The revenue
instruments assigned to a tier of government should match, as far as possible,
the expenditure requirements to induce fiscal responsibility.
ii)
The international experience shows that the range of resources available to urban
local bodies in federal countries such as United States, Canada, Brazil, China,
etc., is very broad compared to that in India. ‘Own’ taxes and user charges
of ULBs in India is grossly inadequate to meet the expenditure needs of ULBs.
Inability of States to assign a buoyant tax to
ULBs in the
place of Octroi has seriously affected municipal fiscal autonomy. Besides, elaborate
State Government controls on the municipal authority to levy taxes and user charges,
set rates, grant exemptions, borrow funds etc. and on the design, quantum
and timing of inter-governmental transfers are constraining ability of the ULBs
in mobilising resources.
iii) The patterns of urban public
finance in India are based on the model of Anglo-Saxon countries like United Kingdom
and Australia, which have an elaborate system of intergovernmental transfers.
In addition to ‘own’ and ‘shared’ revenues, grants-in-aid received from the concerned
State Governments constitute a major resource of ULBs. However, the fiscal position
of the States themselves has been weak with high level of deficits and outstanding
liabilities. Hence, the State Governments have not been in a position to provide
sufficient funds to their ULBs as per the recommendations of the SFCs. Further,
most of them are committed to reducing fiscal deficit, as per their newly enacted
Fiscal Responsibility and Budget Management Acts. While there is a need for empowering
ULBs with ‘own’ taxes and non-taxes, the intergovernmental transfer system, especially
transfers from States to ULBs, need restructuring. The present system in States
is ad hoc, with very little incentive to ULBs to prompt efforts for bridging
the fiscal gap and rendering performance.
Transfers often bail out the incompetent
and the irresponsible.
iv) The study highlights deficiencies
in the conventional method for assessing municipal finances in terms of analysis
of revenue and expenditures of municipalities. ULBs are required to generate revenue
surplus due to statutory requirements. Overall resource gaps of ULBs, as seen
from municipal budgets, are not very large.
However,
the spending by all the municipal bodies is lower than that required for providing
a minimum level of civic amenities. A comparison of per capita spending on core
services by metropolitan municipal corporations in terms of the Zakaria Committee
norms indicates that the level of under-spending on an average works out to be
about 76 percent. Thus, the assessment of municipal finances in "normative
terms", besides the "standard approach" of revenue or fiscal balance
is very essential.
v) Under-spending
in civic services is evidently linked to certain exogenous and endogenous
factors. Exogenous factors include: delegation of revenue powers (decentralization)
and dependency of ULB for resources on upper tier of government (dependency ratio).
Endogenous factors include: revenue (tax) administration, cost recovery and quality
of expenditure.
vi) ULBs have low outstanding debt and debt
sustainability parameters such as interest coverage and debt coverage ratios suggest
that these bodies have considerable scope for debt financing of their expenditure
needs.
vii) The projected investment requirement of funds
for urban infrastructure in the country is estimated at about Rs. 63,000 crore
per annum for the next ten year period. This does not include the needs for redistributive
functions like urban poverty alleviation. The figure constitutes about 2.2 per
cent of the country’s GDP and is at present nearly 3 times the revenue of all
ULBs together. Assuming a status quo in the federal fiscal relationships in the
country, municipal bodies can at best be able to raise upto about Rs.27, 285 crore
per annum or about 1.0 per cent of the country’s GDP in 2004-05. Within this,
the resources available for asset creation after meeting current expenditure would
at best be of the order of Rs 17,736 core, implying an annual shortfall of at
least Rs 10,000 crore (2004-05 prices) even for providing core urban services.
6.2 Municipal Finance Reforms
The study suggests that to start with,
the issues of lack of clarity, consistency and predictability in expenditure assignment
and revenue assignment should be addressed. In particular, the system of taxes,
user charges, inter-governmental transfers and borrowings in respect of ULBs need
to be reviewed for their adequacy and suitability to match the expenditure needs.
Resources are required to be aligned with expenditures so that the delivery of
services most required by citizens can take place effectively. Reforms need to
focus on the basic issues of fiscal federalism, namely, revenue assignment must
be clear and revenue assignment must correspond to expenditure assignment.
There
is also a need to address the issues of service delivery management as in the
ultimate analysis outlays will have to translate into outcomes valued by the public.
The
study finds that ULBs, which have better delegation of revenue powers and less
dependency on upper tiers of Government, perform well in terms of provision of
core services or lower underspending. Thus, the restructuring of revenue powers
to ULBs needs to be given top priority by State Governments, if urban services
are to be improved. Simultaneously, the quality of expenditure by ULBs needs to
be enhanced with a rationalization of the work force and reduction in spending
on establishment and administration. There is considerable scope for the ULBs
to recourse to borrowed funds for improving civic infrastructure as their current
level of indebtedness is perceived to be low. Thus, several ULBs would be in a
position to access the capital market if borrowing constraints are eased and tax-free
bonds are facilitated. However, strong revenue reforms, covering both general
revenues and user charge revenues, are a pre-condition for accessing market funds.
There is a significant scope to raise the user charges which are abysmally low
across the States.
The study suggests some measures for improving the municipal
finances in India as follows:
Expenditure Assignment
The Constitution
(74th Amendment) Act 1992 identifies 18 functions in the 12th
Schedule as belonging to the legitimate domainof urban local bodies. A study of
amendments to municipal acts by the State Governments following the 74th
Amendment reveals that there is inadequate clarity regarding the assignment of
functions to ULBs. Some municipal acts mention of functions ‘as may be assigned
from time to time’ by the concerned State Governments. In the absence of activity
mapping and clarity regarding the levels at which component of functions such
as policy-making, planning, formulation of programmes and projects, implementation,
monitoring, quality assurance, assessment and evaluation are to be performed in
connection with the delivery of particular public services, overlap between the
functional domains of ULBs, State and Central Governments will continue. Functions
of various tiers of government needs to be clear and without any ambiguity.
Revenue Assignment
Inadequate assignment of tax and
non-tax resources including inter-governmental transfers18 , incomplete
delegation of revenue-raising powers, inappropriate user charges, inefficiency
in tax administration and under-exploitation of assigned revenues are some major
factors that have contributed to the resource crunch of ULBs. The ULBs must be
made an integral part of revenue mobilization in as much as they share responsibilities.
Studies recommend a combination of benefit taxes, user fees, development charges
and borrowings for long gestation capital works as appropriate for meeting civic
expenditures. User charges should be based on the marginal cost of additional
units of services from the infrastructure and development charges on the marginal
cost of extending infrastructure to new developments, levied on a development-by-development
basis.
Alternative to Octroi
Assigning an alternative in the
place of Octroi to ULBs is a critical reform, which is pending since long. The
Twelfth Finance Commission has recommended that a tax, preferably linked to the
consumption characteristic of good and hence also buoyant, would be a suitable
alternative to Octroi. The search for a substitute for Octroi may perhaps end
with a reasonable formulae-based share for the ULBs in the Value Added Tax.
Municipal Finance List
A national consensus needs
to evolve on a ‘municipal finance schedule’ for assignment to the ULBs to match
the list of functions included in the 12th Schedule. The context is
critical and given the patterns of urban public finance prevailing in States,
property tax including vacant land tax and taxation of Central and State Government
properties (or service charges in lieu thereof), professional tax, entertainment
tax, advertisement tax, business licensing fee or tax, motor vehicle tax or a
share from the same, planning permission fee, development impact fee, betterment
levy, a surcharge on stamp duty on registration deeds or a share from it and a
proportion of the Value Added Tax may be considered as part of the scheme of revenue
assignment to ULBs. State Governments need to provide freedom to ULBs in matters
relating tax base, tax rate and exemptions. Restrictions, if any, may be only
by stipulation of ceilings or maximum rates of levy.
Matching Revenues
and Expenditure
The Bahl-Linn (1992) principles of local
public finance provide useful guidance for matching local revenue sources with
the expenditures needed. They provide directions for determining the types of
local public services that could be best financed out of revenues from particular
user charges, benefit taxes, generic taxes, administrative fees and borrowings.
There is a need for drawing a map showing broad correspondence between expenditure
responsibilities to be discharged by ULBs and the most appropriate ways to finance
them.
Raising Local Revenue Efforts
While the
huge resource gaps of the ULBs require major structural reforms that take time,
there are no two opinions that ULBs should exploit the revenue sources already
assigned to them more effectively. There is a particular need for focusing on
maximization of revenues from property taxes, user charges and the use of urban
land as a resource. ‘Users pay’, ‘beneficiaries pay’ and ‘polluters pay’ are the
cornerstones of local public finance as suggested by theory as well as practice.
They must be fully made use of through scientific ways of identifying tax base.
Capital
value taxation is recognized as a desirable way to enhance the yield from property
taxes. However, the process to move to such a system is bound to be slow given
the view that tax-payers in cities in India are ‘property-rich’, but ‘cash-poor’.
Moreover, most ULBs do not have a cadre of trained assessors to evaluate property
values and update them regularly. Experiences of cities like Hyderabad and Bangalore
suggest that area-based property tax systems, linked to self-assessment schemes,
have considerable scope for enhancing property tax revenue. Vacant land tax, which
remains one of the most under-exploited taxes in India at the local level, can
be a major source of ULB revenues, with a low rate of tax levied on capital value
of land based on benchmark values for registration. Reforms in administration
of property tax, including assessment, valuation and record-keeping are also called
for.
Linking Services with User Charges
Property
tax is collected under various Municipal Acts with components such as water tax,
drainage tax, lighting tax, conservancy tax and general tax. It is desirable that
services like water supply, which can be measured and for which beneficiaries
can be identified without incurring a huge cost, are financed through user charges.
Linking of services to earmarked user charges and benefit taxes introduces a surrogate
market in the provision of the local public goods concerned. Moreover, there is
a visible trend in the developed countries towards more effective utilisation
of user charges and benefit taxes by local governments due to citizens’ preference
for them over general taxes. ULBs in India need to be enabled to levy user charges
for individual services with the goal of full cost recovery. Benefit taxes should
be levied when the levy of user charges is not possible.
Inter-Governmental
Transfers
India being a three-tier federal system, inter-governmental
fiscal transfers are bound to remain an integral mechanism for solving the problems
of vertical imbalance in the assignment of responsibilities and fiscal powers
between the Centre, State and local bodies. These transfers could be an effective
tool to correct such vertical imbalance, reduce the inequalities amongst ULBs
due to a variety of factors including fiscal power, cost disabilities, revenue
effort, etc. and promote public spending in desired sectors like water
supply, education, health etc. In addition to the factors of vertical balance,
equalization principle and externalities, administrative justification in terms
of economies of scale in tax collection at the Central or State level also stands
as argument in favour of inter-governmental transfers to local bodies.
The
design of inter-governmental transfers from State Governments must be based on
the principles of objectivity, transparency and predictability. The following
criteria are advocated: (a) the transfers must imply a hard budget constraint
for the municipalities and there should be no soft options at the margin; (b)
the quantum and frequency of transfers must be predictable; (c) they must be transparent
through explicit and identifiable entries in government budgets; (d) they must
be pre-determined rather than open-ended and (e) they must have in-built incentives
for promoting local resource mobilisation and effective public service delivery.
A simple distributive formula that gives due weights to needs, rights to minimum
basic services, incentives to performance and inter-jurisdictional equity may
be designed.
Easing Borrowing Restrictions
The
study reveals that metropolitan municipal corporations in the country have favourable
debt sustainability indicators, measured in terms of ratio of debt payments to
revenue receipts, interest coverage ratio and debt coverage ratio. Therefore,
they have potential for utilizing the debt wisely, discretely and prudently for
the purpose of capital formation. A critical issue to be addressed in the context
of debt-financing as a key instrument of municipal finance is that practically
all Municipal Acts in the country impose restrictions on the power of Municipalities
to borrow funds. Examples are: Section 86 of Karnataka Municipalities Act, 1964
as amended by Act No. 24 of 1995; Section 154 of Karnataka Municipal Corporation
Act, 1976 as amended by Act No. 25 of 1995; Section 154 of the Uttar Pradesh Municipal
Corporations Act 1959 as amended by U.P. Act No.12 of 1994; Section 185 of Delhi
Municipal Corporation Act 1957; Section 149 of Hyderabad Municipal Corporation
Act 1955 and Section 142 of Madras City Municipal Corporation Act 1919.
All
these laws make the previous sanction of the State Government (Central Government
in the case of Delhi) mandatory before any borrowing is resorted to by an ULB.
While stipulating that such borrowings would be on the basis of security of all
or any of the taxes, duties, fees and dues authorised under municipal and other
laws, the State Governments prescribe conditions regarding security, rate of interest,
repayment of principal and interest, date of floatation and time schedule for
loan repayment. They also specify the purposes for which borrowing can be resorted
to. These generally include: (a) construction of permanent works, (b) acquisition
of lands and buildings, (c) paying off any debt due to government and (d) repaying
loan previously raised under municipal and other laws.
It
is suggested that borrowing restrictions on ULBs may be relaxed and guided by
pre-specified principles and not by case to case examination at the State level.
Financing
Urban Infrastructure
Some key options for financing
urban infrastructure include: i) specialized banks for municipal lending, ii)
municipal bond markets and iii) specialized municipal funds (e.g. Tamil
Nadu Urban Development Fund). Bank lending model is used in Western Europe while
the municipal bond model is adopted in North America. For accessing capital market
funds, the municipalities need certain financial, structural, institutional and
administrative changes. These include i) availability of buoyant sources of revenue
at their disposal, ii) transformation of the urban governance system with limited
control by State Governments, iii) changes in the capital market structure, iv)
recovery of cost of services and v) escrowing mechanisms to make the urban infrastructure
projects commercially viable. In particular, efforts need to be made to broaden
and deepen the market for Municipal Bonds in the country, by promoting tax-free
and taxable bonds as in USA. For strengthening issuance of municipal bonds, measures
such as bond insurance facility and listing of bonds on domestic stock exchanges
are required.
Strengthening the creditworthiness of ULBs
requires that they be given autonomous authority to set realistic tax-rates and
user-charges for the basic services provided by them and also for pursuing right-sizing
of staff.
Developing Public-Private Partnerships
While
a crucial role exists for the private sector to participate in urban infrastructure,
the intervention of the state and public policy and the format for such partnerships
must be carefully designed. It is also imperative to safeguard the ecological
and equity interests of the society and enforce accountability of both public
and private actors. The ULBs, especially the smaller ones, have limited capacity
to develop public-private partnerships and need to be assisted by specialized
state agencies.
Addressing Poverty Alleviation
The
functions of urban poverty alleviation and slum development and upgradation are
envisaged as legitimate municipal functions under the 12th Schedule of the Constitution,
incorporated by the 74th Amendment Act, 1992. If these redistributive functions
are to be discharged effectively by the urban local bodies, the sources of financing
the same must be clearly spelt out. Unless the ULBs have ‘assured’ or ‘predictable’
sources of revenue for these functions, there is little likelihood that they will
‘own’ them. The municipalities need to be induced to adopt these functions on
the assurance of funding from State and Central Governments, which have recourse
to more buoyant resources.
Expenditure Management and Disclosure
Many
ULBs are seen to incur wasteful expenditure and considerable savings can be achieved
through the elimination of the same. This is particularly true of administrative
and establishment expenditures. There is a need to review expenditure norms and
rationalize them to realistic levels. Procurement reforms, institution of performance
measurement and management system for service providers and regulators, enforcement
of norms of transparency and accountability and implementation of the Right to
Information Act, 2005 are bound to improve the quality of local government expenditures.
Budgeting and accounting systems of urban local bodies need to be simplified;
accrual-based accounting must be put in place following the National Municipal
Accounting Manual. Municipal accounts may be disclosed to the public at regular
intervals in simple and easily understandable formats to induce informed debate
and enforce vigilance.
Professionalisation of Management
Professional
management of urban local bodies is an important reform that is needed to improve
civic service delivery in the country. Recruitment, career progression, performance
management and incentive systems for municipal personnel need to be designed to
warrant efficient performance and accountability in service delivery. Outsourcing
of staff and functions may be considered based on cost-benefit analysis. Capacity
building and training programmes, including change management need to be undertaken
systematically and regularly. Diploma programmes in urban management may be undertaken
in association with reputed management institutions to build a cadre of qualified
municipal managers.
Role of Central Finance Commission
The
74th Constitution Amendment Act 2002 envisages a key role for the CFC in augmenting
the State Consolidated Funds to assist State Governments in the implementation
of SFC recommendations. A strong case is required to be made before the 13th
Central Finance Commission for recommending wide-ranging measures to correct the
problem of vertical imbalance in a holistic manner. The CFC may consider a "normative"
approach for assessing the resource requirements of local bodies to decide the
quantum of grants to them. This is necessary as the time lag between the submission
of reports of SFCs, actions taken by State Governments on SFC recommendations
and the constitution of CFCs is bound to continue.
Norms
for sub-national expenditures may be evolved and depending on the normative estimates
of expenditures to be incurred by State Governments and local bodies, a share
in the central divisible pool of resources may be considered for the local bodies
in lieu of ad hoc grants. As urban poverty issues are going to assume critical
proportions, the CFC may consider revenue assignment for ‘redistributive’ functions
such as urban poverty alleviation and slum development and linking such functions
to a share in ‘redistributive’ taxes like personal income tax, corporation tax
and service tax.
Role of State Finance Commissions
The
SFCs may follow the suggestions made by the Twelfth Finance Commission regarding
approach to be adopted to study the finances of local bodies, identifying problems
and making recommendations. The SFCs, which need to have eminent experts with
knowledge of local public finance or local administration as members, may make
specific recommendations that are implementable. Definite time-frames for implementing
the SFC recommendations by State Governments may also be fixed statutorily. SFCs
may accord priority to ‘measures’ for improving municipal finances and financial
management to address the fundamental factors leading to vertical imbalance rather
than adopting a gap-filling approach.
Promoting Fiscal Responsibility
Key
indicators of fiscal health of urban local bodies need to be designed from time
to time to facilitate meaningful cross-municipal comparisons, benchmarking, drawing
conclusions for measures to augment municipal revenues, cut unnecessary expenditures
and enable the access to market funds. Appropriate fiscal responsibility legislations
need to be considered by State Governments for the urban local bodies.
Municipal
Expenditure Norms
The study has extensively used the
Zakaria Committee norms (adjusted to study period) for working out the under-spending
by urban local bodies and for projecting resource requirement for 10 years. In
this context, it could be indicated that the Zakaria Committee norms, developed
during the early 1960s, pertain to only five core services. Moreover, the costs
of services may be subject to convexity due to technological changes and lack
of natural advantages (e.g. on account of over-growth of cities). Therefore,
there is a strong case for developing new benchmarks for estimating the costs
of municipal services in India by constituting new groups and by undertaking more
primary studies.
Best Practices and Innovations
There
are many best practices and innovative experiments undertaken by urban local bodies
and State Governments in India in areas such as local resource mobilization, expenditure
management, capital budgeting, participatory planning etc. The same need
to be documented and disseminated widely. A national network of resource centres
on urban development, urban poverty alleviation and local public finance and a
national bank on urban best practices and innovations by urban local bodies in
the country and outside may also be developed.
Municipal Finance Database
One
serious difficulty encountered while studying the municipal finances in India
relates to the lack of a comprehensive and consistent database18 .
The entire discussion in Chapter 8 of the Twelfth Finance Commission’s Report
brings out the fact that despite several attempts, there is no source of reliable
data on finances of all local bodies in India to estimate their resource gaps.
The present study of budgets of the 35 metropolitan MCs in the country reveals
the lack of uniformity in classification and reporting of data, which do not allow
precise comparison on various parameters. There is an imperative need to develop
a robust database on municipal finances and the same may be made public on a regular
basis. With increasing urbanization, urban public finance is going to have important
implications for state and national finances. Reserve Bank of India may consider
to steer the building of such a national database on municipal finances. The formats
indicated in Appendix 4, based on the National Municipal Accounting Manual may
be adopted and e-enabled for developing an online municipal finance information
system.
Analytical Research Studies
The
local public finance literature in India does not present analytical studies like
those brought out by OECD for the developed countries. This study has used measurable
indicators relating to revenue balance, fiscal balance, expenditure performance,
debt sustainability, dependency, decentralisation, cost recovery, revenue administration
and quality of expenditure to make comparative assessment of finances of municipal
corporations. There is a need for the regular conduct of similar studies for ULBs,
state-wise and group-wise to draw benchmarks and pursue reforms scientifically.
6.3 Framework for Urban Policy
Jane Jacobs (1984)
held the view that "Cities, not countries, are the constituent elements of
a developing economy and have been so from the dawn of civilisation." This
applies to India as well, with cities acting as the engines of national economic
growth. Cities enable the clustering of complementary economic activities, capital
and skill, entrepreneurial talent and innovation, and scale, scope and agglomeration
economies. Cities raise labour productivity and create potential for sustainable
economic growth and poverty alleviation. Urbanisation shifts people from low-productivity
rural pursuits to high-productivity non-agricultural activities.
It
is evident that as the India matures into a modern service sector-dominated developed
economy owing to structural transformation, urbanisation will get a push. The
positive correlation between income and migration is well-known in the research
on rural- urban migration. It is most likely that as rural areas develop, they
would eventually release population to cities. Secondly, the agricultural sector
still employs about sixty per cent of the country’s labour force, although its
share in GDP is about eighteen per cent.
In contrast to
the picture presented above, in developed countries like USA and UK only about
2-4 per cent of the population is engaged in agriculture. The process of rural-urban
migration and in situ transformation of rural habitations into towns and cities
cannot be stopped. Further, globalisation, information technology revolution,
economic reforms and liberalisation are bound to speed up urbanisation. Cities
are already the preferred destinations of domestic and foreign direct investment
as well as business process outsourcing. Thus, it would be prudent to work out
and pursue urban policy that promotes healthy and orderly urban growth while simultaneously
addressing the negative effects accompanying urbanisation. This calls for a national
urban policy.
It should be explicitly recognised that urbanisation
is a natural consequence of economic development and cities contribute far more
to national economic growth than their share in total population. They contribute
significantly to the country’s national income and exchequer. Urban policy needs
to enable cities to contribute to national development through the effective provision
of infrastructure and services. This, however, cannot be viewed in isolation from
broader economic and social policies. These policies lead to unintended spatial
consequences, which may sometimes be far more profound than those intended or
envisaged originally. Much of urban policy, as Brian Berry observes, is actually:
"…unconscious,
partial, uncoordinated and negative. It is unconscious in the sense that those
who effect it are largely unaware of its proportions and features. It is partial
in the sense that a few of the points at which governments might act to manage
urbanisation and affect its course are in fact utilised. It is
uncoordinated
in that national planning tends to be economic and urban planning tends to be
physical and the disjunction often produces competing policies. It is negative
in that the ideological perspective of the planners leads them to try to divert,
retard or stop urban growth and in particular to inhibit the expansion of metropolitan
and primate cities…" [quoted in Mohan (1996)].
In
view of the above, the approach to urban development and management needs to take
account of the likely impacts of multiple sectoral and spatial policies at Central,
State and Local Government levels. Municipal finance reforms will have to be undertaken
within the ambit of these policies and the structure of fiscal federalism in India.
Therefore, the study has suggested measures which are not drastic and which can
be implemented in the present Indian context.