At a seminar on Performance Reporting for Urban Local Bodies here, Comptroller and Auditor General (CAG) Vinod Rai said challenges posed by the urban infrastructure deficit call for investments of a scale that require immediate attention.
He said while there have been improvement in the finances of the States, "neither they nor the Union Government can, by themselves, meet the requirements of the Urban Bodies.
"Therefore, access to markets and participation by the private sector appears to be the options that need to be actively examined," Rai added.
Referring to almost non-existent municipal bonds market in India, Rai said: "For the cities in India to be able to access markets for finances, they must be able to ensure that their financial reporting practices are in line with the other entities that access the markets for funds".
In advanced nations, municipal bonds act as the principal mode of financing urban infrastructure. Developing countries like South Africa and Russia too have relatively well developed municipal bond markets.
Rai said while a number of Urban Local Bodies have audited accounts available till FY 2010-11, quite a few are pending for a number of years.
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While most cities have switched to the double entry accrual system of accounting, there are some which continue with single entry based accounting, he said.
"We clearly need to cover a lot of ground and we need to do so on an urgent basis," he added.
India's urban population as per the 2011 Census is at 377 million and is growing at a far more rapid pace than the rural population. The country requires USD 1 trillion investment over the next five years to develop infrastructure.