Lecture III

Introduction to Urban Finance

Naim Keruwala

Urban
Finance

Financing
Municipal
Corporatio
ns

Tax
Revenue

Non Tax
Revenue

Financing
Urban Poor

Market
based
Financing

Grant in
aid

Micro
Finance

Tax Revenue
Octroi
Local Body Tax
Property Tax

Non Tax Revenue

Water Charges
Sale of land
Development Charges
Connection Fees
Lease

Property Tax
Component
s of
Property
Tax

Water Tax

House Tax

Services
Tax

Lighting
Tax

Fire Tax

Sewerage
Tax

Etc.

Principles of a good property tax

structure
Low rate of property tax so as to make it
acceptable by the public at large
Minimize the discretion on the part of assessors
in tax levy
Make the process of assessment, levy and
collection transparent and simple
Ensure equity between classes of tax payers /
property owners
Facilitate self assessment of property tax by
property owners/occupiers

ource: Urban Essays (2008), Jha

Property Tax Reform by

Ahmedabad
Property Tax = Annual Rate x Area x
(F1 x F2 x F3 x F4)
F1 The location factor
F2 Year of construction (age) factor
F3 Type of building factor (Residential). Use
of building factor (Non residential)
F4 Occupancy factor (Landlord / Tenant)

Exercise
Find the share of property tax in
municipal revenue of the city
assigned to you
Method of assessing Property Tax

Market based Financing

Components
of Urban
Infrastructure

Physical
Infrastructure

Economic
Infrastructure

Social
Infrastructure

Buildings,
Water, Waste
Disposal,
Transport

Industries,
Markets,
Trading
Centres

Schools,
Hospitals,
Cultural
Centres

Market based Financing

Municipal Bonds
Video 1 : Market based Metropolitan
Financing by ICRIER
Video 2 : Municipal Bonds by LPL
Financials

Market based financing for

Urban Poor
Video Janalakshmi by Janaagraha,
Bangalore

 Discussion
Lecture IV
1. Case Studies on Urban Finance
2. Introduction to PPP
3. Case Studies on PPP