Review of the Implementation of 74th Constitutional Amendment Act

A Case of Gujarat

Presented by:

Prof. Madhu Bharti

Ms. Bindu P.

APSA 2007, Colombo

Faculty of Planning and Public Policy, CEPT

University
Ahmedabad – 38 00 09.
STRUCTURE OF THE PRESENTATION

 BACKGROUND

 KERALA EXPERIENCE

 IMPLEMENTATION IN GUJARAT

 STUDY AREA

 EMERGING ISSUES

 POLICY OPTIONS
BACKGROUND
 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
Agglomerations
Total number of Towns : 5161
 EMPOWERMENT OF LOCAL GOVERNMENT-THE
RISING NEED..
URBAN SECTOR GROWTH IN INDIA

350 % increase in urban population over 50

past four decades. 45

40
35

% GROWTH
30
Projected urban population 410 million 25
20

by 2011 and 550 million by 15

10

2021(NIUA 2000) 5
0
1961 1971 1981 1991 2001

Unplanned &uncontrolled growth of towns YEAR

-immense pressure on ULB % of Urban Population to Total Population

Decada l Urban gro wth rate(Percent)

Local governments face difficulties in

meeting their expenditure
15%-95% of state government
transfer –discretionary and often
Need to .strengthen governance at local level decentralize to reduce
distorted
state control
Functional & Financial empowerment of ULB leading to increased local
autonomy
THE 74THCAA –DECENTRALIZATION INITIATIVE IN URBAN INDIA
A national effort aimed at ‘devolution’ of appropriate functional responsibilities
and the corresponding financial resources to the urban local bodies

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 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 ULB’s 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.

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 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, Ahmedaba

 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 responsibilty
At 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
More than a decade after the enactment of the Act, in the
context of ongoing reform initiatives the question arises:

- 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?Faculty of Planning and Public Policy, CEPT University, Ahmedaba
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 critical

issues 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 fiscal
relations 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.
Faculty of Planning and Public Policy, CEPT University, Ahmedaba
 STUDY FRAMEWORK
Review of 74th CAA as a step Analyze of the post
Study of Kerala as
towards empowerment amendment fiscal
a successful scenario in Gujarat

LITERATURE
Review post amendment example
reforms ULB and their Discussions with KILA
Ongoing reforms in
Gujarat municipal

REVIEW
implications. officials,CEO
bodies
Broad Study of the & council member
implementation status of the Thripunithara
municipality
74th CAA –All India
STATE LEVEL IMPLEMENTATION ULB LEVEL CHECK-MUNICIPALITIES
CHECK GUJARAT OF BHARUCH DISTRICT

DATA ANALYSIS
Review of SFC reports and Municipal Budget documents and
State Finance Board reports income expenditure details 2001-
2006
Income expenditure details of Interview held with:
all municipalities in Gujarat •Chief executive officers,
1996-2006 •President of elected council,
•Secretary,
•Elected Council Members,
Interviews held with officials of
•Accounts Offices, Chief Engineer,
DOM, GMFB, and GUDM Internal Auditor, Town Planning & Urban
Development Officials.
REVIEW OF ONGOING
REFORM INITIATIVES
GAPS & ISSUE
IDENTIFICATION
RECOMMENDATIONS & CONCLUSIONS
 74TH CAA….. AT A GLANCE

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
Faculty of Planning and Public Policy, CEPT University, Ahmedaba
KERALA EXPERIENCE
 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.
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 people’s participation, leading to keener oversight in the execution
of schemes, 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
Unconventional & innovative strategy for the decentralization process
‘Peoples Planning Campaign’ –to set agenda for decentralization
‘Big Bang Approach’ to decentralized governance

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 KERALA ACHIEVEMENTS & CHALLENGES
ACHIEVEMENTS:
The formula based devolution of funds has ensured equitable funds
flow
Peoples Participation -designed to facilitate intervention by the interested citizen at
all stages of the development process
Wide ranging reforms
•independent regulatory institutions like SEC,SFC,OMBUDSMAN,APPELATE TRIBUNALS,
STATE DEVELOPMENT 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 mechanisms
•Mandatory 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
improving service delivery
CHALLENGES:
• The quality of service delivery by local government has not improved to the
extent desired.
• 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
IMPLEMENTATION IN GUJARAT
 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 : 920
Total 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
GUJARAT
 URBANISATION TRENDS IN GUJARAT
URBAN POPULATION OF GUJARAT
Gujarat urban population increased 20,000,000

three fold from 5.315 million(25.77%) in 18,000,000

16,000,000

URBAN POPULATION
1961 to 37.6% 2001 14,000,000

12,000,000

10,000,000

The 2001 urban population-Gujarat is 8,000,000

6,000,000

18.22 millions(37.6%) while India 286.02 4,000,000

2,000,000

million(27.85%) 0

YEAR

Gujarat stands among the economically URBAN POPULATION

better states, per capita income

Rs.16,998 compared to India Rs.14682
PERCENTAGE OF URBAN POPULATION TO TOTAL
POPULATION

40.00

35.00

PERCENTAGE
30.00

25.00

20.00

15.00

10.00

5.00

0.00

YEAR

PERCENTAGE OF URBAN POPULATION TO TOTAL POPULATION

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 CHECK ON THE STATUS OF
IMPLEMENTATION

URBAL LOCAL BODY

LEVEL
A CASE OF BHARUCH
DISTRICT MUNICIPALITIES
GUJARAT STATE LEVEL BHARUCH-CLASS A
ANKLESWAR-CLASS B

PROVISIONS OF GUJARAT MUNICIPALITIES STATUS JAMBUSAR-CLASS

OF C
REFORM
THE 74th CAA ACT 1963 .GUJARAT ACT NO. IMPLEMANTATION INITIATIVES &
34 OF 1964 COMMENTS

PROVISIONS OF THE STATUS OF IMPLEMENTATION COMMENTS &

74th CAA REFORMS
BHARUCH ANKALESWAR JAMBUSAR
CLASS A CLASS B CLASS C

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 FISCAL EMPOWERMENT OF MUNICIPALITES –A CLOSER
Review of the Gujarat municipal finances 1996-2006 reveals:
LOOK

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 1.04Faculty

and 2.4of Planning
percent and Public Policy,
(2003-2006), CEPT University,
respectively Ahmedaba
indicates the
 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
years but 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

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

STUDY AREA
 BHARUCH AS A CASE….

Bharuch as a study case

Rapid increase in economy -“golden corridor”
High trends of urbanization-rapid industrial development
HENCE HIGH DEMAND ON BASIC INFRASTRUCTURE
PROVISION
Both Bharuch and Ankleswar have signed MOA with
State
%SHAREGovernment specifying
OF URBAN POPULATION TO TOTAL POPULATION timelines for the
reforms
30.00

25.00
% POPULATION

20.00

15.00

10.00

5.00

0.00
1961 1971 1981 1991 2001
YEAR
%SHARE OF URBAN POPULATION TO TOTAL POPULATION

jambusar
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
Faculty of Planning and Public Policy, CEPT University, Ahmedaba
 STATE LEVEL AREA OF CONCERN…THE WARD COMMITEES
PROVISIONS OF THE GUJARAT STATUS OF IMPLEMANTATION REFORM INITIATIVES &
74th CAA MUNICIPALITIES ACT COMMENTS
1963 .GUJARAT ACT NO. 34
OF 1964
(As modified up to 31stAugust
2006)

Article 243 S: The concept notReform process to ensureFormation of ward

Constitution and presented in thecommunity representationcommittee is in
composition of existing Act and participation ongoing. the process.
the ward
committees Amendment ProcessState Government current JNNURM REFORM-
process is ongoing. status claim: Area Sabha for
Informal system of takingurban areas GOG is
decision at different level. waiting for the
guidelines on
The annual plans arecommunity
discussed with fellowparticipation law
corporators and public by andfrom GOI and based
large and their suggestionson that appropriate
are incorporated in the planlaw would be
before putting it to Standingformulated.
Committee and General
Board.

Gujarat Town Planning &

Urban Development Act 1976
ensure the community
participation in spatial urban
planning.
STATE LEVEL AREA OF CONCERN…TAXATION POWERS
PROVISIONS OF THE GUJARAT STATUS OF REFORM INITIATIVES &
74th CAA MUNICIPALITIES ACT IMPLEMANTATION COMMENTS
1963 .GUJARAT ACT NO.
34 OF 1964
(As modified up to
31stAugust 2006)

Article 243 X: Contain theThe present tax andHigh political intervention

Power to provisions in detailuser chargesinto the taxation process
impose taxes as to which type ofdecided by theto be curbed.
by and, funds taxes a municipalitygeneral body and
of can collected. after public approval,Reform
municipalities put across for state
government approval. 1.Area based property
taxation system.

2.Mandatory 85 percent of
O& M cost recovery on
service proved by
ULB,moving towards 100
percent cost recovery

3 Setting up of tax rate

setting commission and
fixing tax and user charge
range under process
TAXATION POWERS AND FINANCIAL OBLIGATIONS IN MUNICIPALITIES-THE ISSUES…
COMPONENTS PARTICULARS COMMENTS
& REFORM INITIATIVES
Procedure for Municipality shall, by passed at aPolitical pressure hampers the
imposition of general meeting. increase in tax rates and hike in
taxes The municipality shall publish the rulesuser charges.
so approved with notice. State Government control- If
Any objection within a month isthe establishment expenditure
considered and discussed. exceeds 45% of expenditure 10
Notification proposed in accordance% deduction in establishment
forwarded to state government. grant every year and certain other
grants with held.

Revision of The state government may byempowered to revise their tax

Taxes notification in the official gazetterates.
empower any municipality to levy anyNo voluntary initiatives to raise
tax or to increase or reduce the amounttheir tax rates came from
or rate of any tax levied withinmunicipalities (2001-2007)-DOM
maximum and minimum limits source
Lack of political will. The state
government initiates the process in
Existing autonomy hampered by low political monthlywill.
review meetings with
CEO.
Automatically
Rate of Tax
leads the State Government
Not specified
to highly intervene
Empowered to decide the tax rates
into the local governance process to help ituser
and sustain.
charges.
Level of autonomy is this
State Government has to constantly perform a monitoring role to
respect is high ensure
but misutilized
cost recovery of the service provided due to low political will.
Reform initiatives: Base tax rates
ULB LEVEL AREA OF CONCERN…TAXATION POWERS

PROVISIONS OF THE STATUS OF IMPLEMENTATION COMMENTS &

74th CAA REFORMS
BHARUCH ANKALESHWA JAMBUSAR
CLASS A R CLASS B CLASS C
Article 243 X: Property Property Property tax Tax rate &user charge
Power to impose Water Water Water tax setting decisions are
taxes by and, Vehicle Vehicle Sewerage directly taken by
funds of Theatre Entertainment Entertainment elected body
municipalities Special fee Special fee Special
Rental property Market charges:
Markets Lighting Special water Political pressure very
Sewerage Rental property tax high.
Lighting Cattle
Shops Reform initiative:
Revision of Property sale State government
water tax case cess plans to set a tax
setting regulatory
authority
Area based property
tax system process
ongoing.

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

STATE LEVEL AREA OF CONCERN…AUDIT OF ACCOUNTS
PROVISIONS OF GUJARAT MUNICIPALITIES ACTSTATUS OF REFORM INITIATIVES &
THE 74th CAA 1963 .GUJARAT ACT NO. 34 OF IMPLEMANTATION COMMENTS
1964
(As modified up to 31stAugust 2006)

Article 243 Z: Audit provided for underThe audit wasCertain

Audit of the provisions of theconducted by theirregularities in the
Accounts of Gujarat Local Fund AuditLocal funds auditexisting system
municipalities ACT, 1963(GUJ.XLIX). team. (case study)

The municipal accounts Reform aiming at

may be audited at any more accountability
time by the state and transparency –
government
1.The local funds audit to
The auditor shall for the be under the purview of
CAG
purpose of his office have
access to all accounts and 2.Mandatory adoption
records of the of double entry
municipality. accounting system in
all urban local bodies
based
Reality check micro level
reflects irregularities in
existing auditing and also
low level of compliance of
ULB to audit team
recommendations.
ULB LEVEL AREA OF CONCERN…AUDIT OF ACCOUNTS

PROVISIONS OF THE STATUS OF IMPLEMENTATION COMMENTS &

74th CAA REFORMS
BHARUCH ANKALESHWA JAMBUSAR
CLASS A R CLASS B CLASS C

Article 243 Z: AuditRegular, Once in

of Accounts of every year local
municipalities fund audit

Irregular. Irregular. Level of compliance to

Two year back One year the recommendations
log.* back log.* of the audit team has
also been low.

* As per information given by accounts division officials in the Municipalities

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 AREA OF CONCERN IN THE 12TH SCHEDULE
CONFORMITY TO THE DEVOLUTION OF FUNCTIONS IN 12TH SCHEDULE
THE TWELFTH SCHEDULE DEVOLUTION COMMENTS(BASED ON MICRO LEVEL CASESTUDY)
FUNCTIONS STATUS

Urban planning including GOG Largely comes under the purview of the
town planning declared as town planning department.
fully
Regulation of land use and Land use as per the town planning
transferred.
construction of building schemes.

Planning for economic and Development plans prepared by the Town

social development planning department.
Roads and bridges Dependent on the Public Works Department
for Technical sanction-Low Technical
capacity being the reason for such
dependence.
Water supply for Devolved but projects implemented with
domestic, industrial and the help of Gujarat water supply &
commercial purposes sewerage board.Techinical competence
lacking.
Urban forestry, protection Taken care of by municipality, involvement
of environment and of NGO prevalent
ecology
Safe guarding interest of No other efforts other than representation
the weaker section of the in the elected council
society including the
handicapped and the
mentally retarded.
 REVIEW OF THE LOCAL BODY FINANCES…
FINANCIAL PERFORMANCE OF CLASS A,B,C MUNICIPALITIES-A COMPARISION
FINANCIAL PERFORMANCE BHARUCH ANKALESHWAR JAMBUSAR
INDICATORS
Resource Mobilisation
Share of own source of funds in 34.63 41.21 19.56
Total Revenue Income
Share of Property Tax of funds in 14.97 9.91 8.10
Total Revenue Income
Share of revenue grants (octroi incl) 65.37 58.79 80.44
and subsidies of funds in Total
Revenue Income
Share of revenue grants excluding 25.62 16.61 53.5
octroi grant in Total Revenue
Income
Fund Application
Share of establishment to total 20.85 42.84 28.86
revenue expenditure (%)
Share of establishment to total 19.98 35.07 18.49
revenue income (%)
Share of O & M in total revenue 72.42 55.57 63.40
expenditure (%)
Performance Indicators 
Operating Ratio 1.02 0.82 0.64
Capital Utilization Ratio 0.31 0.79
* capital works only  1.24 *
in 2003-2004
 REVIEW OF THE LOCAL BODY FINANCES…THE KEY FINDINGS
 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.

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

EMERGING ISSUES
 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 while only 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.
High state intervention (reflected from Bharuch,Ankleshwar ,Jambusar case
studies)

The discussions held reveals that the state government has direct and strong
control over the functioning 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. Faculty of Planning and Public Policy, CEPT University, Ahmedaba
 EMERGING ISSUES…
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 involvement –decisions are more politically driven

(“We ,the representatives of people know their needs”)

Local Planning Initiatives –totally dependent on the Town Planning Department

–TP.schemes
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
more autonomous.

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 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 to be 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

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

POLICY OPTIONS
 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 & local level 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 the technical 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 resulting lack of willingness to pay would result in the local body
continuing to sustain on the state government
• Widening tax structure
Acceptable 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, Ahmedaba

 RECOMMENDATIONS FOR FUTURE POLICY
OPTIONS
Efficient resource mobilisation

Focus should be on taxes that yield good revenue and efforts made to make the
tax collection system more water tight.

STATUS OF PROPERTY TAX REFORM IN BHARUCH,ANKLESWAR ,JAMBUSAR

Municipality Existing Surveyed %covered Potential for
registered property extra tax
property 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 local body 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 GOG head in the right direction and need to be further
strengthened.

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 RECOMMENDATIONS FOR FUTURE POLICY
OPTIONS
Community participation–a 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 and ensure best service

Regular performance check on 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, Ahmedaba

THANK YOU

Faculty of Planning and Public Policy, CEPT University, Ahmedaba

 AN LOOK INTO THE FINANCES OF ALL MUNICIPALITIES IN GUJARAT
Financial year %Tax income %Octroi % Property Tax % Revenue %Establishment % Establishment
in Total Income in in total tax Grant in total Expenditure to Expenditure
Revenue total tax income revenue income revenue expenditure against revenue
Income income 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, Ahmedaba

 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 Property, vehicles, boats, animals,Registration fee, license fee,
(As modified up to 31 August
st
motor vehicles, octroi, dogs, specialswimming bath fee, slaughter house
2006) and general sanitary cess, lighting, salefee, building construction fee, shop
of cattle in market, betterment levy 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 After deduction of the recovery -expenditure 100 percent of the remaining
Water Rate amount

Education Cess 75 percent of 85 percent on the basis of percentage of recovery provided that the
responsibilty of the primary education is undertaken ,otherwise 5 percent of the
recovery to the urban local bodies
Entertainment Tax 50 percent of the income, though the amount is given as a contribution against
the scheme expenditure through the Municipal Finance Board.

Professional tax 50 percent of the amount collected from the are given a grant in lieu of the
professional tax.