On 16 March, most people who live in cities would have closely followed the Union Budget 2012 as it unfolded amid the customary grandeur surrounding the most watched policy statement of the government of India. While whether the budget needs to gravitate more towards policies rather than tax rates and proposals can be the subject of endless debate, there is no discounting its relevance and importance to the urban Indian. It can weigh wallets quite substantially—through such things as income-tax rates, exemptions and deductions, customs and excise duties on consumer goods, and the pricing of petroleum products. These are things that matter to every household and to every Indian, despite the limited direct influence they wield on the decisions.

Still, ask most people in urban India what irritates them the most on a day-to-day basis, and the budget is unlikely to find a mention. The typical answers would be: traffic, roads and potholes, water and sewerage, garbage, flooding, power and transport. Ironically, the causes and cures for most of these long-standing grievances have little to do with the Union government or its big budget, but lie, instead, in city halls and their relatively modest budgets.

Aerial view of Mumbai. Photo: HT

The root cause of this anomaly lies both with governments and citizens, the twin actors in democracy. Indian cities are governed by local self-governments that are purportedly the building blocks of the democratic edifice. However, their behaviour far belies their position. City councils and municipal corporations in India have shown far lesser propensity for responsible financial governance than not just the Union government, but even their respective state governments. While it is true that they lack the financial muscle required to stand on their feet, even within their precincts, they have shown little imagination or ability in keeping their books in order. Budgets not presented on time, budget estimates that miss their mark by a significant measure, annual audit backlogs of several years, lack of standardized reporting formats, complete absence of a management discussion and analysis section to their filings, and the lack of a participative processes are all ubiquitous in the urban financial landscape.

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After all, citizens can only see what they are shown. Besides the token gesture of disclosing their annual budgets on their websites, city governments do precious little. None of the top 10 cities of India had disclosed their audited financial statements for the year ended 31 March on their websites, including the Municipal Corporation of Greater Mumbai that has a budget size in excess of 20,000 crore. Collectively, the top 10 cities are home to more than 80 million people representing over 20% of India’s urban population. A comparison with the private sector accountability framework is stark, but not misplaced, given that citizens have an inherent right to governance information and their numbers are much larger than those of private sector stakeholders.

The Union and state governments’ budget processes in comparison are better evolved, systematic and transparent. This is part of the reason citizens follow the Union budget show. They at least get to see something.

The solution to the government’s side of the problem is relatively simple, but critical; it requires waking up to the problem and demonstration of immense political and administrative will to fix it.

The citizen dimension of the problem is more complex and nuanced, and more a consequence of governance deficit at the local level than anything else. As mentioned already, one of the reasons citizens do not look at city budgets is because they do not get to see much of it. Another is the collective lack of social consciousness. The governance deficit, and poor public infrastructure and services are pushing urban Indians further and further into isolated private spheres of comfort in which the “social" and the “civic" are becoming subservient to the “personal". This, at least in part, explains the resonance of the Union budget, which has a direct impact on personal finances and consumption. By contrast, city budgets have very little monetary impact at the personal level and have more to do with common spaces. This argument is further accentuated by the fact that urban allocations in the Union budget itself have a bearing on the infrastructure and quality of life in cities, but do not receive the same attention as tax proposals.

One can reasonably hope that better governance and public infrastructure will eventually emerge. However, only a collective surge in citizens’ aspirations for a better quality of life in their cities can set a chain reaction in motion that will eventually address governance deficit. Citizen participation and attention to city budgets is arguably the most crucial aspect of this process. Citizens have the potential to exercise a direct influence on quality-of-life factors such as roads, footpaths, sewerage and garbage, storm water drainage, and safety through participation in their city budgets and direct interaction with their elected representatives to the city council (in contrast, there is little they can do when it comes to state, or Union budgets).

Let us admit that many of us spend much of our lives in urban India and these are fraught with angst. If we aspire to witness a transformation of our cities into world-class habitats in our lifetimes, we need to start paying attention to city governance and, consequently, city budgets. And strong urban economies will be the rising tide that lift living standards in the country as a whole.

We cannot afford to live locally and think only nationally. Real change should begin in our neighbourhoods.

Srikanth Viswanathan is manager, Public Record of Operations and Finance (PROOF), Janaagraha Centre for Citizenship and Democracy. Janaagraha’s PROOF initiative was instrumental in formulating the service-level benchmarking framework and enactment of the Public Disclosure Law reform under the flagship Jawaharlal Nehru National Urban Renewal Mission, which mandates disclosure of annual and quarterly financial statements and service levels by urban local bodies.