Even as the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), a Centrally sponsored scheme for urban development, mandates a reforms process for urban local bodies (ULBs), a new World Bank study released on Tuesday shows Indian municipal corporations have some way to go.
With most municipal budgets being expenditure-based, performance was judged on this criterion, the report said.
“This has usually resulted in poor expenditure controls, inadequate reporting and an incentive to spend the budget allocation as soon as possible, thus lacking focus on actual service delivery. The concept of linking budgets to strategic vision or multi-year budgeting is almost non-existent,” the report said.
The study compares the financial practices of a cross-section of municipal corporations against a framework evolved by the Public Expenditure and Financial Accountability programme, a partnership between several countries, including the UK and the European Commission, and development financial institutions such as the World Bank.
Titled Public Finance Management and Accountability in Urban Local Bodies, the study highlights best practices in budgeting and financial planning in some states and identifies areas that municipal corporations need to work on.
“It was encouraging to see the velocity of financial reforms in ULBs across the country,” said Rachid Benmessaoud, operations adviser for World Bank India. “The government wanted the urban local bodies to get their act straight. The plan was that the mission (JNNURM) would be used for asset creation (in urban areas) and help cities approach the market in future. To do that, fiscal discipline is essential,” said Anil Baijal, an adviser to Infrastructure Development Finance Co. Ltd.
The report specifically identified Tamil Nadu for undertaking legislative reforms by bringing a multiplicity of laws under the Tamil Nadu Urban Local Bodies Act, 1998.
Referring to the findings of the report, urban development secretary M. Ramachandran said the reforms process was poised for a take-off as more state governments were willing to implement change.