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Tuesday 16 February 2016

February 16

Discuss the significance of reforms in financial management of municipalities. How to ensure financial self-sufficiency and financial accountability in municipalities for better urban governance?
India has 4,041 cities with over 400 million population but the revenue of their municipalities are not adequate.
We have seen many time infrastructural gap in municipalities because of lack in financial reforms. This financial reforms is necessary as now we are moving ahead with some key projects like 'Smart City' and 'AMRUT'. To make these projects effective, we need to strengthen the third tier of governance. The functional items within the purview of municipalities are planning of cities, regulation of land use, construction of roads and bridges, water supplly, public health, sanitation and solid waste management. These functional items is base for development of cities and it requires adequate fund also. With inadequate fund for the bottom level, irrespective of the outlay from center, the top-down approach will shatter.
For overcoming the above mentioned facts, we need following measures to ensure better urban governance:
1. Municipalities as the important machinery of decentralised administration requires adequate share in devolution of funds from the state for their proper functioning.The total grants for local bodies recommended by the 14th Finance Commission are Rs 2,87,436 crore for a five-year period from April 1, 2015 to March 31, 2020. Of this, Rs 2,00,292.20 crore will be given to panchayats and Rs 87,143.80 crore to municipalities. The transfers for financial year 2015-16 will be Rs 29,988 crore. A total of 2.88 lakh crore grant to local bodies. Each state will spend money according their laws for governing the local bodies.
2. State need to implement Fiscal Responsibilities and Budget Management(FRBM) Act for the municipalities to ensure sustainable availability of fund for them.
3. Account of municipalities should be audited on the regular basis.
4. There should be effective policy on transparency, accountability and citizen participation. The public disclosure law under the Jawaharlal Nehru National Urban Renewal Mission was a good beginning in this regard.
5. It required more skilled staff in the finance and revenue departments of municipalities. Shortage of this is a key reason for poor tax collections and weak financial management.

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An important part of education, particularly higher education, is to learn to ask questions and to develop the capacity for disobedience and reasoned arguments.” Do you agree with this view? Critically comment.

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