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The revenues of Urban Local Bodies (ULBs), on average, contribute to less than 37 per cent of their total receipts, constraining their ability to make investments to improve services, according to a study.
Among the 12 states analysed in the study, Punjab (74 per cent), Goa (55 per cent) and Andhra Pradesh (54 per cent) were the only ones whose municipal bodies contributed revenue over half of the total receipts.
The Janaagraha Centre for Citizenship and Democracy (JCCD) analysed the state of municipal finance in the ULBs based on the audit reports published by the CAG for 21 states since 2010. The CAG takes up a few states every year for audit.
The ULBs depend on state and central grants to a significant extent, constraining their ability to make capital investments to improve infrastructure services and other investments to improve their functioning, JCCD Deputy Head (Deputy Head, Advocacy and Reforms) Anil Nair said.
Manipur's urban local bodies contributed a revenue of only 5 per cent to the total receipts, while Himachal Pradesh and Chandigarh 16 per cent each, Uttar Pradesh 25 per cent and Rajasthan 32 per cent.
The ULBs in Tamil Nadu and Karnataka contributed 33 per cent each to their respective total receipts, while Assam contributed 45 per cent and Gujarat 48 per cent, according to the JCCD.
Out of 21 states, data on proportion of own revenues and per capita total receipts of the ULBs was available only for 12 states.
Nair told PTI that the lack of revenue generation by the ULBs was primarily due to weak collection of property tax and bad management of its properties, like shops.
The ULBs need to improve collection efficiencies of own revenues, mainly, property tax, advertising tax and parking fees, he said, adding that buoyant sources of revenues such as stamp duties and entertainment taxes should also be devolved to the ULBs.
The analysis also showed that there was a significant delay in preparation of accounts and audit of the ULBs, leading to an inability to ascertain their accurate financial position and performance.
"To clear the pendency in accounts and audit, states should actively consider empanelling chartered accountants," Nair said.
Other highlights of the study include lower per capita spending by the ULBs across smaller cities on infrastructure and services, resulting in poorer quality of life, he said.
There was also significant backlog in CAG audits of local bodies undermining the quality of 'Technical Guidance and Supervision (TG&S)' by the auditor, Nair said.
The latest CAG report was available for Andhra Pradesh, Assam, Karnataka, Telangana (2016); Chhattisgarh, Himachal Pradesh, Maharashtra, Punjab, Rajasthan, Tamil Nadu, Madhya Pradesh, Bihar, Kerala (2015); Manipur, West Bengal (2014) Gujarat, Haryana (2013); Goa (2012); Uttar Pradesh , Jharkhand (2011) and Odisha (2010), according to JCCD.