Naidu favours GST revenue share for municipalities

Seeking to ensure a guaranteed flow of funds for urban local bodies, Urban Development Minister M Venkaiah Naidu today favoured a share of Goods and Services Tax (GST) revenue for municipalities to enable them take up urban reconstruction initiatives.
Naidu expressed concern over the huge urban fiscal gap while addressing a "National Workshop on Governance, Administrative Reforms and Capacity Building" here.
He said that the country's municipalities are the weakest in the world in terms of access to resources, financial autonomy and revenue raising capability. Quoting from a report of the McKinsey Global Institute, he noted that annual per capita income of all municipalities was only Rs 1,430 as against the expenditure commitment of Rs 6,030.

Stressing on the need for predictable and guaranteed resource flows to urban local bodies, Naidu said that he will explore the possibility of earmarking a share of revenues from the proposed GST with Finance Minister Arun Jaitley.
The Minister emphasised that Public-Private-Partnership model is a crucial vehicle for mobilising huge order of resources required for building smart cities and bridging the huge infrastructure deficit in other urban areas.
Naidu observed that the success of PPP in India is associated with projects that are technically simple, have small gestation periods and allow easy estimation of costs but PPP is needed more in the more complex infrastructure projects and this shall be made a success through good governance and institutional framework.

Expressing concern over inadequate capacities of urban local bodies, Naidu informed that the Government is giving priority to enhance required capacities through spending a specific share of cost of each scheme on capacity building, sharing of knowledge and information about best practices, promoting regional hubs for supporting capacity building of urban bodies.
The workshop was organised by the Indian Council for Research in International Economic Relations (ICRIER) with the support of the Ministry.