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Review of the Implementation of 74th Constitutional Amendment Act A Case of Gujarat

Presented by: Prof. Madhu Bharti Ms. Bindu P.

APSA 2007, Colombo

Faculty of Planning and Public Policy, CEPT University Ahmedabad – 38 00 09.


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Total Population Urban Population Area Population Density Total number of States : 1.03 billion (2001) : 28% of total population : 3179012 : 324 persons/ : 35 : 593 : 384 : 5161

and Union Territories
Total number of Districts Total number of Urban Agglomerations Total number of Towns Total number of Sub Districts: 5564

CEPT University. 350 % increase in urban population over past four decades. % GROWTH URBAN SECTOR GROWTH IN INDIA 50 45 40 35 30 25 20 15 10 5 0 Projected urban population 410 million by 2011 and 550 million by 2021(NIUA 2000) Unplanned &uncontrolled growth of towns immense pressure on ULB Local governments face difficulties in meeting their expenditure 15%-95% of state government transfer – discretionary and often distorted.. Ahmedabad .EMPOWERMENT OF LOCAL GOVERNMENT-THE RISING NEED. 1961 1971 1981 YEAR 1991 2001 % of Urban Population to Total Population Decadal Urban growth rate(Percent) Need to strengthen governance at local level decentralize to reduce state control Functional & Financial empowerment of ULB leading to increased local autonomy THE 74THCAA –DECENTRALIZATION INITIATIVE IN URBAN INDIA A national effort aimed at „devolution‟ of appropriate functional responsibilities and the corresponding financial resources to the urban local bodies Faculty of Planning and Public Policy.

48% Uttar Pradesh.Guarat.74. Municipal expenditure average forms 0. CEPT University.81%gujarat.7%.India's Municipal Sector -Study For Twelfth Finance Commission.Finland 41%)  Dependency on state government transfer varies across states.6% of the revenue raised by central government & 8.83.Sandeep Thakur.82% maharashtra.5% respectively.33 %Rajasthan DATA SOURECE:Om Prakash Mathur.(2004).Local Government Finances-Post Amendment Scenario  1991-92 municipal revenues 4.In advanced countries local government expenditure usually account for 2025 % of total expenditure (Denmark 45%.17.1% punjab.75% of the GDP Average establishment (salaries &wages) 54.61%(1997-98) & 0.      Municipal share in INDIA GDP is 0. Faculty of Planning and Public Policy.2 % while O&M 39..93 % of the total municipal expenditure 2002-2003 total expenditure of local bodies as % to total (union +state +ULB) forms 4.13.63% (2000-2001) Goa.05% of state government 2001-2002relative % share of municipal revenue formed 3.Maharashtra & Punjab ULB’s revenue averages higher than national averages. Ahmedabad .10.5  % & centre 57.07% while state 39.

A MOVE TO WARDS URBAN REFORMS 2003-2007 TOWARDS URBAN REFORMS..PRESENT SCENARIO…. CEPT University. Ahmedabad . URIF INITIATED URBAN REFORM PROCESS Reform of property tax levy Reasonable user charges Introduction of double entry system JNNURM -2006 -2011-ENCOURAGE REFORMS AND FAST TRACKED DEVELOPMENT Implementation of the 74th CAA Property tax reform GIS & MIS applications in Urban Local bodies THRUST ON IMPROVED URBAN GOVERNNANCE & SERVICE DELIVERY SO THAT THE ULB BECOMES FINANCIALLY SOUND AND SUSUTAINABLE FOR UNDERTAKING NEW PROGRAMS Faculty of Planning and Public Policy..

1993 . in the context of ongoing reform initiatives the question arises: . Entry -5 of the State list-only reference to municipalities ULB was a complete state responsibilty At the time .BACKGROUND The 74th CAA.ULB Constitutional recognition.How far have the states adopted the provisions of the 74th CAA? .the reason being:  Failure to hold regular elections .prolonged super cession  Inadequate devolution of powers. Previously. Ahmedabad . CEPT University.1992. functions and resources? . functions and finance THE OBJECTIVE OF THIS GREATER DEGREE OF AUTONOMY AND FINANCIAL EMPOWERMENT WAS TO MAKE ULB EFFICIENT AND VIBRANT DEMOCRATIC UNITS OF SELF GOVERNMENT More than a decade after the enactment of the Act.Has the ULB been empowered with more powers.Has this amendment contributed to greater efficiency and hence greater development? Faculty of Planning and Public Policy. came into force June 1 .weak and inefficient ULB .How has the ULB functioning mechanism been effected by this amendment? .

Ahmedabad  . CEPT University. Faculty of Planning and Public Policy. OBJECTIVES OF THE STUDY  Understand the 74th CAA as a step towards empowerment  Study of the existing status of implementation and the various critical issues involved and assess the implications of the 74th CAA on the performance of the municipal bodies  Analyze the impact of fiscal empowerment of the municipalities on it efficiency and the development process and how state-local fiscal relations have altered after the CAA To identify and give recommendations on certain methods by which this amendment can be used as a framework for further development in the context of ongoing reforms.AIM OF THE STUDY To review the implementation of the 74th CAA on the municipal bodies in Gujarat and assess the impact of the amendment on the performance of the urban local bodies.

and GUDM REVIEW OF ONGOING REFORM INITIATIVES GAPS & ISSUE IDENTIFICATION RECOMMENDATIONS & CONCLUSIONS . •President of elected council. •Secretary. Internal Auditor.CEO & council member Thripunithara municipality Analyze of the post amendment fiscal scenario in Gujarat Ongoing reforms in Gujarat municipal bodies STATE LEVEL IMPLEMENTATION CHECK GUJARAT ULB LEVEL CHECK-MUNICIPALITIES OF BHARUCH DISTRICT Municipal Budget documents and income expenditure details 2001-2006 Interview held with: •Chief executive officers. Chief Engineer.STUDY FRAMEWORK LITERATURE REVIEW DATA ANALYSIS Review of 74th CAA as a step towards empowerment Review post amendment reforms ULB and their implications. •Elected Council Members. •Accounts Offices. GMFB. Broad Study of the implementation status of the 74th CAA –All India Study of Kerala as a successful example Discussions with KILA officials. Town Planning & Urban Development Officials. Review of SFC reports and State Finance Board reports Income expenditure details of all municipalities in Gujarat 1996-2006 Interviews held with officials of DOM.

Regular Elections Continuity-five year tenure State Election Commission State Finance Commission Audit of Accounts Taxation Powers •Sustainable Human Development •Adequate representation of weaker section of society Article 243Y Article 243Z Article 243X Article 243K Strengthen the financial resource •Enhanced People participation available to the local bodies.. Municipal Council. District Planning Committees Metropolitan Planning Committees. CEPT University. improve transparency delivery •Improved service Faculty of Planning and Public Policy. Ahmedabad .74TH CAA….stability of which have been previously under represented. Article 243T Article 243W Ensure representation of all sections •Political many of society. Powers authority and functions Set up institutional mechanism to facilitate decentralization. Municipal Corporation Constitution of Ward Committees. AT A GLANCE OBJECTIVES PROVISIONS PART IX A OF THE CONSTITUTION FEATURES OF THE 74th CAA Three tier system Nagar -Panchayat. •Democratization Reservation of seats Ensure that urban local bodies Process At Local Level •Improved Decision Making are Article 243U not superseded by states. to achieve. Article243Q Article 243 S Article ZD Article ZE Demarcate the role of Urban Local Bodies andimplications aimed Positive specify their functions.


both human and financial. leading to keener oversight in the execution of schemes. along with resources. and • Unleash public action resulting in a demand-led improvement in the delivery of developmental and welfare services Unconventional & innovative strategy for the decentralization process ‘Peoples Planning Campaign’ –to set agenda for decentralization ‘Big Bang Approach’ to decentralized governance Faculty of Planning and Public Policy. followed by better upkeep of assets. The state transferred not only of functions and responsibilities. Objectives of Kerala decentralization • Improve the quality of investment by allocating resources for priorities fixed locally • Facilitate emergence of local solutions to developmental problems through improved planning.THE KERALA DECENTRALISATION EXPERIMENT-A CASE STUDY Kerala has carried out certain pioneering reforms in the context of decentralized governance. better implementation. • Bring about a convergence of resources and services to tackle development problems with greater vigor. use of traditional knowledge and appropriate technology etc • Exploit local production possibilities. • Provide the enabling environment for people to make contributions in kind and cash for development programs identified by them for priority action. but also the authority to carry them out. CEPT University. Ahmedabad . • Enable people’s participation.

Participatory aspect of planning is often limited to airing of needs and sharing of benefits.ACHIEVEMENTS: KERALA ACHIEVEMENTS & CHALLENGES The formula based devolution of funds has ensured equitable funds flow Peoples Participation -designed to facilitate intervention by the interested citizen at all stages of the development process •independent regulatory DEVELOPMENT COUNCILS.OMBUDSMAN. Tendency to spread resources thinly with preference being given to every electoral constituency whenever a development scheme is taken up. Wide ranging reforms institutions like SEC. STATE •improved management systems both financial and administrative •enhanced accountability mechanisms –performance & social audit Development matters local governments •Better service delivery-evolved efficient and cost effective mechanisms •Mandatory Women Component Plan •Poverty reduction-more funds from local government to poverty stricken families CHALLENGES: • • • • •Many local governments have been able to raise public contributions for improving service delivery The quality of service delivery by local government has not improved to the extent desired.SFC. The flow of bank credit into local schemes has been rather limited resulting more from bankers‟ reluctance to deal with local governments-thus higher subsidies .APPELATE TRIBUNALS.


Consumer goods : 27 : Chemicals. . Petrochemicals. : 260 persons/sq. Textiles.17% : 920 : 25 : 242 : 18539 Total number of Cities Major Industries Total Population Urban Population Area Population Density Literacy Rate Sex Ratio Total number of Districts Total number of Towns Total number of Villages : 51 Million (2001) : 37% of total population : 196024 : 69.


315 million(25.6%) while India 286. CEPT University.16. per capita income Rs. Ahmedabad .000 25.URBANISATION TRENDS IN GUJARAT Gujarat urban population increased three fold from 5.998 compared to India Rs.4 CLASSIFICATION OF MUNICIPALITIES IN GUJARAT 2001 CENSUS MUNICIPALITY CLASS A B C D TOTAL MUNICIPALITIES POPULATION ABOVE 100.000 to 25.02 million(27.77%) in 1961 to 37.14682 Table 6.85%) Gujarat stands among the economically better states.000 50.6% 2001 The 2001 urban population-Gujarat is 18.22 millions(37.000 15.000 to 100.000 to 50.000 NUMBER 9 32 44 58 143 Faculty of Planning and Public Policy.


After octroi abolition property tax forms the main source of internal revenue . •Nearly 75 % of the tax income octroi income prior to its abolition. CEPT University. The octroi income substituted by octroi grant by the state government has increases the revenue grant component in the revenue income from an average of 13 percent prior to the abolition of octroi to 60 percent dependency on grant in the revenue income. Ahmedabad .04 and 2. Indicates the weak contribution of local economy to the state.4 percent (2003-2006).58 to .809.4 ranks third after Maharashtra and Punjab. Faculty of Planning and Public Policy. the main reason-the abolition of Octroi in municipalities . •The cumulative tax income of all the municipalities in Gujarat (2002-2006) to total tax revenues of the state ranges only 0.FISCAL EMPOWERMENT OF MUNICIPALITES –A CLOSER LOOK Review of the Gujarat municipal finances 1996-2006 reveals: Gujarat-12% total municipal revenues in India after Maharashtra(48%) •Gujarat per capita internal resource Rs. respectively indicates the need to optimize the resources. The establishment expenditure against revenue income and expenditure increasing at a rate of 1.Nearly 52 percent of the total tax income.61 percent. Hence focus on property tax for raising revenues.

7. Ahmedabad . With tenure period of 2 years but extended further.98 Out of total 73 recommendations. Certain weak policy aspects of the 1st SFC recommendations that emerge are as follows • Weak Devolution Model Framework • Absence of Untied Funds • Inadequate Data Base • Lack of Performance Based Devolution of Resources • Lack of Social Audit and Performance Audit • Inadequate Borrowing Policy Framework Faculty of Planning and Public Policy. 1st SFC Report submitted to GOG on 13. CEPT University.GUJARAT STATE FINANCE COMMISSION-AREAS OF CONCERN. 46 have been accepted completely 12 were accepted partially . The report awaits final approval. 15 were not accepted by the State Government 2nd SFC has been constituted on 19th November 2003..


KM YEAR OF ESTABLISHMENT BHARUCH A 148391 17.00 15.BHARUCH AS A CASE….00 % POPULATION 20.35 1852 ANKALESHWAR JAMBUSAR B C 67952 38771 8.00 5.12 1859 1986 Faculty of Planning and Public Policy.00 25.00 10.87 5. Ahmedabad .00 0. Bharuch as a study case Rapid increase in economy -“golden corridor” High trends of urbanization-rapid industrial development HENCE HIGH DEMAND ON BASIC INFRASTRUCTURE PROVISION Both Bharuch and Ankleswar have signed MOA with State Government specifying timelines for the reforms %SHARE OF URBAN POPULATION TO TOTAL POPULATION 30. CEPT University.00 1961 1971 1981 YEAR %SHARE OF URBAN POPULATION TO TOTAL POPULATION 1991 2001 jambusar MUNICIPALITY CLASS TOTAL POPULATION AREA SQ.

Formation of ward committee is in the process. JNNURM REFORMArea Sabha for urban areas GOG is waiting for the guidelines on community participation law from GOI and based on that appropriate law would be formulated. Gujarat Town Planning & Urban Development Act 1976 ensure the community participation in spatial urban planning. State Government current status claim: Informal system of taking decision at different level.GUJARAT ACT NO. . 34 OF 1964 (As modified up to 31stAugust 2006) PROVISIONS OF THE 74th CAA STATUS OF IMPLEMANTATION REFORM INITIATIVES & COMMENTS The concept presented in existing Act not the Reform process to ensure community representation and participation ongoing.STATE LEVEL AREA OF CONCERN…THE WARD COMMITEES GUJARAT MUNICIPALITIES ACT 1963 . Amendment Process process is ongoing. Article 243 S: Constitution and composition of the ward committees The annual plans are discussed with fellow corporators and public by and large and their suggestions are incorporated in the plan before putting it to Standing Committee and General Board.

Area based taxation system.Mandatory 85 percent of O& M cost recovery on service proved by ULB.STATE LEVEL GUJARAT MUNICIPALITIES ACT 1963 . property 2. Reform 1. High political intervention into the taxation process to be curbed. Article 243 X: Power to impose taxes by and. put across for state government approval.moving towards 100 percent cost recovery 3 Setting up of tax rate setting commission and fixing tax and user charge range under process . 34 OF 1964 (As modified up to 31stAugust 2006) AREA OF CONCERN…TAXATION POWERS PROVISIONS OF THE 74th CAA STATUS OF IMPLEMANTATION REFORM INITIATIVES & COMMENTS Contain the provisions in detail as to which type of taxes a municipality can collected. funds of municipalities The present tax and user charges decided by the general body and after public approval.GUJARAT ACT NO.

COMMENTS & REFORM INITIATIVES Political pressure hampers the increase in tax rates and hike in user charges. Any objection within a month is considered and discussed. empowered to revise their tax rates. by passed at a general meeting. high but misutilized due to low Not specified Rate of Tax political will. Procedure for imposition of taxes Revision of Taxes The state government may by notification in the official gazette empower any municipality to levy any tax or to increase or reduce the amount or rate of any tax levied within maximum and minimum limits Existing autonomy hampered by low political will. The municipality shall publish the rules so approved with notice. the local Level of autonomy is this respect is governance process to help it sustain. Notification proposed in accordance forwarded to state government. Empowered to decide the tax rates intervene into Automatically leads the State Government to highly and user charges.TAXATION POWERS AND FINANCIAL OBLIGATIONS IN MUNICIPALITIES-THE ISSUES… COMPONENTS PARTICULARS Municipality shall.If the establishment expenditure exceeds 45% of expenditure 10 % deduction in establishment grant every year and certain other grants with held. No voluntary initiatives to raise their tax rates came from municipalities (2001-2007)-DOM source Lack of political will. State Government control. State Government has to constantly perform a monitoring role to ensure Reform initiatives: Base tax rates cost recovery of the service provided would be fixed in the amended Municipality Act (process ongoing . The state government initiates the process in monthly review meetings with CEO.

ULB LEVEL AREA OF CONCERN…TAXATION POWERS PROVISIONS OF THE 74th CAA STATUS OF IMPLEMENTATION BHARUCH CLASS A Property Water Vehicle Theatre Special fee Rental property Markets Sewerage Lighting Revision of water tax case ANKALESHW AR CLASS B Property Water Vehicle Entertainment Special fee Market Lighting Rental property JAMBUSAR CLASS C Property tax Water tax Sewerage Entertainment Special charges: Special water tax Cattle Shops Property sale cess COMMENTS & REFORMS Tax rate &user charge setting decisions are directly taken by elected body Political pressure very high. CEPT University. Ahmedabad . Faculty of Planning and Public Policy. Article 243 X: Power to impose taxes by and. funds of municipalities Reform initiative: State government plans to set a tax setting regulatory authority Area based property tax system process ongoing.

The audit was conducted by the Local funds audit team.STATE LEVEL AREA OF CONCERN…AUDIT OF ACCOUNTS GUJARAT MUNICIPALITIES ACT 1963 .Mandatory adoption of double entry accounting system in all urban local bodies based Reality check micro level reflects irregularities in existing auditing and also low level of compliance of ULB to audit team recommendations. 34 OF 1964 (As modified up to 31stAugust 2006) PROVISIONS OF THE 74th CAA STATUS OF IMPLEMANTATION REFORM INITIATIVES & COMMENTS Audit provided for under the provisions of the Gujarat Local Fund Audit ACT. Certain irregularities in the existing system (case study) Reform aiming at more accountability and transparency – 1.XLIX).The local funds audit to be under the purview of CAG 2. The municipal accounts may be audited at any time by the state government The auditor shall for the purpose of his office have access to all accounts and records of the municipality.GUJARAT ACT NO. Article 243 Z: Audit of Accounts of municipalities . 1963(GUJ.

Once in every year local fund audit Irregular. * As per information given by accounts division officials in the Municipalities Faculty of Planning and Public Policy. One year back log. Two year back log.* Irregular. CEPT University.* Level of compliance to the recommendations of the audit team has also been low.ULB LEVEL AREA OF CONCERN…AUDIT OF ACCOUNTS PROVISIONS OF THE 74th CAA STATUS OF IMPLEMENTATION BHARUCH CLASS A ANKALESHW AR CLASS B JAMBUSAR CLASS C COMMENTS & REFORMS Article 243 Z: Audit of Accounts of municipalities Regular. Ahmedabad .

Land use as per the town planning schemes. Development plans prepared by the Town planning department. Largely comes under the purview of the town planning department.Techinical competence lacking. involvement of NGO prevalent No other efforts other than representation in the elected council Largely limited to the execution of centre and state government schemes. industrial and commercial purposes Urban forestry. Devolved but projects implemented with the help of Gujarat water supply & sewerage board. Safe guarding interest of the weaker section of the society including the handicapped and the mentally retarded.AREA OF CONCERN IN THE 12TH SCHEDULE CONFORMITY TO THE DEVOLUTION OF FUNCTIONS IN 12TH SCHEDULE THE TWELFTH SCHEDULE FUNCTIONS DEVOLUTION STATUS COMMENTS(BASED ON MICRO LEVEL CASESTUDY) Urban planning including town planning Regulation of land use and construction of building Planning for economic and social development Roads and bridges Water supply for domestic. Slum improvement and upgradation Urban poverty alleviation No other efforts other than representation in the elected council . protection of environment and ecology GOG declared as fully transferred. Dependent on the Public Works Department for Technical sanction-Low Technical capacity being the reason for such dependence. Taken care of by municipality.

79 16.02 0.07 55.C MUNICIPALITIES-A COMPARISION FINANCIAL PERFORMANCE INDICATORS Resource Mobilisation Share of own source of funds in Total Revenue Income Share of Property Tax of funds in Total Revenue Income Share of revenue grants (octroi incl) and subsidies of funds in Total Revenue Income Share of revenue grants excluding octroi grant in Total Revenue Income Fund Application 34.49 63.42 1.63 14.B.79 * capital works only in 2003-2004 .5 Share of establishment to total revenue expenditure (%) Share of establishment to total revenue income (%) Share of O & M in total revenue expenditure (%) 20.21 9.64 Performance Indicators Operating Ratio Capital Utilization Ratio 1.40 0.62 58.84 35.91 19.61 80.37 25.56 8.85 19.31 42.97 41.44 53.REVIEW OF THE LOCAL BODY FINANCES… FINANCIAL PERFORMANCE OF CLASS A.10 BHARUCH ANKALESHWAR JAMBUSAR 65.24* 0.86 18.82 28.98 72.57 0.

Jambusar less than unity. CEPT University. Faculty of Planning and Public Policy.REVIEW OF THE LOCAL BODY FINANCES…THE KEY FINDINGS  The share of own source (tax +non tax ) in revenue income is as low as 19.  Octroi grant forms nearly 60 percent of the revenue grant due to which the percentage share of grant (octroi incl. This clearly indicates the low level of developmental activities.) is as high as between 58-80 percent. Incase of Jambusar over the five year review period only in the year 2003-04.5 percent in Jambusar which is class C . Ahmedabad .  Average capital utilization ratio in three cases show lack of utilization of available capital income indicating the low utilization of funds available for capital works. capital expenditure has been made. indicating a revenue surplus.  The average operating ratio Bharuch shows a revenue deficit Ankleswar .while Bharuch class A is also only 34 percent.


EMERGING ISSUES… High dependency on grants from state government Municipality is dependent on state government for both their administrative costs and capital works. Faculty of Planning and Public Policy.Ankleshwar . CEPT University. Ahmedabad . High state intervention (reflected from Bharuch.class C reflects high dependency of 59 %on grants in the revenue income while only 18 %of the revenue income comprises of the own sources tax and non tax) Ankleswar . User charges and taxes as decided by the urban local body requires prior ratification. Jambusar . In order to cover their administrative costs the local body receives a 33 percent grant and all their capital works are based on state grants and subsidies.The concept of community involvement lost . Access to banks and financial intermediaries for loan requires prior permission to be sought from the state government .Jambusar case studies) The discussions held reveals that the state government has direct and strong control over the functioning of the local bodies in the following aspects All the grants are in the form of tied grants wherein the grant is given for specific purpose Agenda of local priorities set by state .class B and Bharuch.class A the percentage own source of income to total revenue income is 41 % and 36 % respectively.

Various committees that are formed completely comprise of the ruling party members and the decisions are open for discussion only when the general body meetings are held. CEPT University.EMERGING ISSUES… High political intervention and lack of public participation Elected body takes strong control over the most of the decisions of the municipality. Faculty of Planning and Public Policy. Ahmedabad . information-case studies) Implementation of water and sewerage projects-GWSSB This reconfirms the need for capacity building to make the local government more autonomous.schemes Technical competence & Organizational Capacity Execution of public works prior technical sanctioning from PWD department (planning dept.( information received from elected body members.Bharuch and Ankleswar Lack of community involvement –decisions are more politically driven (“We .the representatives of people know their needs”) Local Planning Initiatives –totally dependent on the Town Planning Department –TP.

Public Disclosure Law to be adopted without delay Faculty of Planning and Public Policy. Accounting system needs to be transparent and budgetary documents needs to be given public access Double Entry process ongoing since one year (as per case studies) Process needs to be accelerated. Lack of strict monitoring on level of adherence to the audit recommendations . Ahmedabad .hence remains neglected. Capacity Building of accounting staff to adopt new system is area of concern.EMERGING ISSUES… Transparency & Accountability Ankleswar and Jambusar case reveals one year and two year back log for the audit. CEPT University.


Capacity building of existing technical staff integration of external experts Breaking viscous cycle of low performance The vicious cycle of low financial base. CEPT University. hence low level of service delivery and resulting lack of willingness to pay would result in the local body continuing to sustain on the state government •Widening tax structure Acceptable tax structure needs to evolve where the citizen are willing to pay for the good quality service Faculty of Planning and Public Policy. For increased autonomy the need arises to improve the financial resource base & local level capacity building initiatives. Ahmedabad .RECOMMENDATIONS FOR FUTURE POLICY OPTIONS The state functioning as a facilitator Local body should function as autonomous units while state monitors the process. Separate nodal agency to be set up for continuous capacity building initiatives Improvement of Technical Competency The recruitment process of technical staff at local level must be made rigid so that the technical competency of the staff is ensured.

RECOMMENDATIONS FOR FUTURE POLICY OPTIONS Efficient resource mobilisation Focus should be on taxes that yield good revenue and efforts made to make the tax collection system more water tight. Faculty of Planning and Public Policy. Ahmedabad . Cost Recovery for service delivery and thrust to cover at least the O&M charges by GOG head in the right direction and need to be further strengthened. STATUS OF PROPERTY TAX REFORM IN BHARUCH.JAMBUSAR Municipality Existing registered property 43061 19107 10023 Surveyed property 36891 20684 12244 %covered Potential for extra tax revenue Ongoing 7% 22% Bharuch Ankleswar Jambusar 85 107 122 Source:GUDM last updated on 19th December 2006 Rationalization of user charge User charges for provision of basic services are generally politicized wherein in the local body is compelled to provide services for free or at negligible cost Solution would be by fixing the minimum user charges to be levied for various services.ANKLESWAR . CEPT University.

CEPT University. Ahmedabad . Committees should involve non political representation in the form of experts from various fields. social workers and representatives of voluntary organization. Well defined framework for the non political inclusion at grass root level so that a common system could be followed and ensured throughout the state Introduce sense of competition in ULB Reduce monopoly in the provision of service by the local body. Faculty of Planning and Public Policy. Parallel service provider like private players would instill the sense of competition and ensure best service Regular performance check on the functioning of local bodies and a platform of comparison among them with certain incentives earmarked for most efficient local bodies.RECOMMENDATIONS FOR FUTURE POLICY OPTIONS Community participation–a structured framework &expert involvement Social Accountability to all the actions of the local government and transparency should be instilled into the system.

THANK YOU Faculty of Planning and Public Policy. Ahmedabad . CEPT University.

83 11.52 49.56 22.52 12.80 63.50 27.88 7.12 64.32 Financial year 1995-96 1996-97 1997-98 1998-99 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 2004-2005 2005-2006 Source:GMFB Income Expenditure Tables Faculty of Planning and Public Policy. Ahmedabad .53 52.16 75.84 56.10 15.14 % Establishment Expenditure against revenue income 46.33 76.23 54.00 32.99 0.07 52.41 %Establishment Expenditure to revenue expenditure 50.47 71.57 52.24 4.26 57.78 75.18 61.27 56.96 53. CEPT University.72 % Revenue Grant in total revenue income 12.AN LOOK INTO THE FINANCES OF ALL MUNICIPALITIES IN GUJARAT %Tax income in Total Revenue Income 72.00 0.07 8.58 54.33 74.12 46.47 62.65 72.35 %Octroi Income in total tax income 77.11 22.00 66.06 10.21 58.47 63.55 54.61 55.21 49.23 55.00 0.22 34.00 0.06 58.00 % Property Tax in total tax income 7.25 19.77 77.17 64.76 77.55 14.03 57.48 52.15 19.57 54.92 69.91 62.41 70.78 7.45 24.74 50.

cattle pound fee LIST OF TAXES THAT ARE SHARED BETWEEN MUNICIPALITY & GOG NAME OF THE TAX Non Agricultural Assignment Land and Revenue (Agriculture) Local cess on Land Revenue and Water Rate Education Cess THE SHARE GIVEN TO THE URBAN LOCAL BODIES 75 percent of the total amount collected from the municipal area 35 percent of the recovery made during the previous year After deduction of the recovery -expenditure 100 percent of the remaining amount 75 percent of 85 percent on the basis of percentage of recovery provided that the responsibilty of the primary education is undertaken . Entertainment Tax Professional tax . motor vehicles. betterment levy FEES THAT CAN BE LEVIED Registration fee. though the amount is given as a contribution against the scheme expenditure through the Municipal Finance Board. animals. vehicles. boats. 34 OF 1964 (As modified up to 31stAugust 2006) DISCRETIONARY TAXES Property.LIST OF DISCRETIONARY TAXES & FEES THAT CAN BE LEVIED AS PER GUJARAT MUNICIPALITIES ACT 1963 LEGISLATION .otherwise 5 percent of the recovery to the urban local bodies 50 percent of the income. lighting. swimming bath fee. 50 percent of the amount collected from the are given a grant in lieu of the professional tax. shop registration fee. octroi. license fee. special and general sanitary cess. building construction fee. slaughter house fee. dogs. water or connection fee.GUJARAT ACT NO. sale of cattle in market.