{"id":213967,"date":"2022-11-11T19:07:37","date_gmt":"2022-11-11T13:37:37","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=213967"},"modified":"2022-11-11T19:07:37","modified_gmt":"2022-11-11T13:37:37","slug":"significant-inefficiencies-rbi-report-on-municipal-corporations","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/significant-inefficiencies-rbi-report-on-municipal-corporations\/","title":{"rendered":"Significant inefficiencies: RBI report on municipal corporations"},"content":{"rendered":"\n

Source: <\/b>The post is based on the article <\/span>\u201cSignificant inefficiencies: RBI report on municipal corporations\u201d<\/b> published in <\/span>Indian Express <\/b>on 11th November 2022.<\/b><\/p>\n

What is the News?<\/b><\/h5>\n

The Reserve Bank of India (RBI) has released a document titled \u201cReport on Municipal Finances\u201d.<\/span><\/p>\n

What are the key observations made by the report?<\/b><\/h5>\n

On Municipal Corporations (MCs):<\/b> The rapid growth of urbanization in India has not been accompanied by a corresponding increase in urban infrastructure which is reflected in the performance of urban local bodies especially Municipal Corporations(MCs). For instance,<\/span><\/p>\n

\u2013 The size of municipal budgets in India is much smaller than peers in other countries.\u00a0<\/span><\/p>\n

\u2013 The s<\/span>hare of MCs own revenues (those they can raise on their own from tax and non-tax sources) has been declining and the share of government transfers has been increasing \u2014 which indicates a growing fiscal dependency on such grants from higher levels of government.\u00a0<\/span><\/p>\n

\u2013 Municipal revenues\/expenditures in India have stagnated at around 1% of GDP for over a decade. In contrast, municipal revenues\/ expenditures account for 7.4% of GDP in Brazil and 6% of GDP in South Africa.<\/span><\/p>\n

\u2013 MCs committed expenditure in the form of establishment expenses, administrative costs and interest and finance charges is rising but capital expenditure is minimal.<\/span><\/p>\n

\u2013 MCs mostly rely on borrowings from banks and financial institutions and loans from Centre and State governments to finance their resource gaps in the absence of a well-developed market for municipal bonds.<\/span><\/p>\n

On State Finance Commission(SFC): <\/b>State governments have not set up state finance commissions(SFCs) in a regular and timely manner even though they are required to be set up every five years.\u00a0<\/span><\/p>\n

\u2013 Accordingly, in most of the States, SFCs have not been effective in ensuring rule-based devolution of funds to Local governments.<\/span><\/p>\n

What are the suggestions given by the report?<\/b><\/h5>\n

Municipal corporations should adopt sound and transparent accounting practices with proper monitoring and documentation of various receipts and expenditure items.\u00a0<\/span><\/p>\n

MCs should explore different innovative bond and land-based financing mechanisms to augment their resources.<\/span><\/p>\n

In order to improve the buoyancy of municipal revenue, the Centre and the states may share one-sixth of their GST revenue with them.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

Source: The post is based on the article \u201cSignificant inefficiencies: RBI report on municipal corporations\u201d published in Indian Express on 11th November 2022. What is the News? The Reserve Bank of India (RBI) has released a document titled \u201cReport on Municipal Finances\u201d. What are the key observations made by the report? On Municipal Corporations (MCs):… Continue reading Significant inefficiencies: RBI report on municipal corporations<\/span><\/a><\/p>\n","protected":false},"author":10317,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1566,3127,1305,9],"tags":[10500],"class_list":["post-213967","post","type-post","status-publish","format-standard","hentry","category-daily-factly-articles","category-economy","category-index-reports-bodies","category-public","tag-indian-express","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":"","cached_date":1700416358},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/213967","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10317"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=213967"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/213967\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=213967"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=213967"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=213967"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}