RBI’s report on 232 municipal corporations (2019-20 to 2023-24) highlights fiscal strain and the urgent need for financial reforms
Urban areas drive 60 per cent of GDP, but MCs lack resources, with revenue at just 0.6 per cent of GDP. Ten MCs account for 60 per cent of these receipts
MC revenues rely heavily on govt grants: state transfers were 30%, and Union transfers just 2.5%, stressing the need for diverse income sources
MCs must reform property tax and set realistic user charges. Property tax, 60 per cent of revenue, needs revision to reflect market values and boost income
Greater fiscal autonomy for MCs is vital. Allocating GST revenue shares to local bodies could improve development planning and financing options
Increased fiscal powers for local bodies can improve outcomes, meet urban needs, reduce dependency, and boost accountability in governance