Growing importance of cities and urban local governments in improving their finances and public service delivery

Re-engineering government Kala Seetharam Sridhar ET 10 Dec, 2007

In India, municipal bodies are the primary providers of key urban services like water supply, sewerage, sanitation/solid waste management and city-wide roads. There are currently 73 municipal corporations, 1,770 municipal councils, 229 town area committees and 717 notified area committees in the country, with state governments having the discretion in deciding the status of urban settlements. In some cities, municipal bodies account for a significant share of total public spending in the metropolitan areas. For instance, local expenditure accounted for a significant 43% share of the estimated total (central, state and local) government spending in the Mumbai metropolitan area, while in Ahmedabad the share of local expenditure in total government expenditure was 31%...

Several urban local governments in the country have been very innovative in their urban management practices. Ahmedabad Municipal Corporation became the first local body in the country in 1996 to tap the capital market to obtain funds through issue of a bond. Such initiatives by a number of cities have led to a market for credit-rating of cities, based on their financial management.

A number of other cities have also shown the way in other, innovative methods of financing of urban services. Indore has come up with a model, a 50:50 programme in which citizens of a jurisdiction get their roads revamped from a private contractor and the municipal corporation foots the remaining 50% of the bill. Surat, once afflicted by the plague, has now been transformed into a beautiful city, post-1994, because of innovative urban management practices. Many cities have privatised their mass transport systems.

Last, but not the least, the Right to Information Act was passed in Parliament in 2005, which is indeed a very powerful weapon in the hands of the common man. This law can be used to seek information on various aspects of government functioning and service delivery, which has implications for the public. While this law cannot be used to seek solution to public problems, it certainly can be used to seek more information about the problem, and to know more about its cause(s). This itself, in many cases, would have been obfuscated without the Act, hence is a major check on public corruption, making the government much more accountable as a service provider.

It is true that these initiatives are drops in the ocean, and a lot more needs to be done to reinvent and re-engineer government. But we have to start somewhere and the journey has begun. (The author is fellow, National Institute of Public Finance and Policy, New Delhi. Views are personal.)