1992, we amended the constitution to offer municipal corporations more authority. These local bodies have been around for a long time but we only formally recognised their role in the governance hierarchy after 1992. So with the amendment, we had the centre, the state and the local bodies. And with it we had more decentralization, Municipal corporations could finally understand local issues and fix them. They had funds, functions and functionaries.
there are 18 functions handed over to municipal corporations. They have to take care of things such as urban planning, roads, water supply, street lights, sewage etc.
So they can generate revenue through taxes, fees, fines and charges. But in most cases, they don’t have the provision to tax people directly. Instead, the state and centre government handles taxation and transfers some of the proceeds to municipal corporations
40% of municipal revenue now comes from central and state governments.
the state governments have to set up a State Finance Commission every 5 years. That’s the body in charge of determining how to allocate funds to municipal corporations. But in many states, SFCs have not been set up on time. For instance, while Rajasthan has set up 6 SFCs over the years, Gujarat has set up only 3. And that’s definitely not a good sign.
SFCs take 32 months on average to submit a report. And that results in delays of 16 months. And then State governments take their own sweet time of around 11 months to table their reports in the state assembly.
municipal corporations are required by law to maintain a balanced or surplus budget
you’re cash-strapped like the BBMP (Bengaluru), you mortgage your prime property!
For instance, in 2011, the municipal corporation handed over 11 of its properties to banks — this included the famous K R Market and the Public Utility Building. And a couple of years later, it used the beautiful Town Hall building as collateral for funds too.
