Home / News / India /  Which is India's best-financed metro?

From traffic jams to broken streetlights, many of the problems associated with life in the city comes down to two fundamental issues: money and power. Across India, cities, and especially the metros, struggle to deliver basic infrastructure and services largely because they lack both finances and autonomy.

In 1992, a constitutional amendment had sought to deliver this finance and autonomy to cities by adding a third tier of governance below the Centre and states. This meant urban local bodies (municipal corporations or nagar palikas) were charged with delivering the basic infrastructure (such as roads and pipes) that makes cities tick. But this mandate is far from materialising, especially in terms of fiscal resources.

Publicly available data on city finances is patchy and dated, but analysis by Janaagraha, a not-for profit organisation working on urban issues, estimates that India’s six metros spent just 8172 on an average for each of its residents in 2015-16—far lower than what cities of similar sizes globally spend (Johannesburg spent 20,289 in 2015-16) and what even a few smaller cities in India spend (Visakhapatnam spent 12,424).

Municipal finances also do not have any uniform accounting standards, making comparisons across cities complicated. To address this, Mint analysed budgets of each of the six metros from 2014-15 (the latest year for which comprehensive data is available) at a line-by-line level to classify expenditure and receipts into broad categories. We found no major pattern across cities. Mumbai’s biggest budget items seemed to be largely administrative, while in other metros, there is no dominant category with spending spread across several smaller items related to education, electricity, transport and public works.

In terms of revenue, cities can raise money through taxes and user fees for services (e.g. waste management). One measure of a city’s ability to do this is how much revenue it raises on its own, compared with its total expenditure. According to Janaagraha, there is significant variation in this revenue-raising capability across cities and metros. For instance in 2015-16, Hyderabad (67%) and Delhi (60%) were among the most efficient at raising revenue, while Kolkata and Chennai were the worst (both earning only 23% of their spending on their own). As a result, both cities had to rely more on other sources of financing such as grants from the Centre and state.

Cities such as Kolkata and Chennai are also hindered by the inability to tax properties accurately, largely due to a combination of inefficient tax systems, inadequate property assessments and large exemptions. In an article published in Ideas for India, Soumyadip Chattopadhyay and Arjun Kumar estimated that India collects property tax worth only 0.2% of gross domestic product (GDP), much lower than what other large economies collect. The 2016-17 Economic Survey had estimated that Bengaluru should be collecting 4-7 times the amount of property tax it does now.

A city’s ability to raise money is further constrained by shortcomings in urban governance. City administration largely remains the responsibility of municipal commissioners who are bureaucrats appointed by state governments. Mayors, who are typically the elected chiefs of cities globally, are largely ceremonial positions in India with just six out of 23 mayors in major cities elected directly, according to Janaagraha. Even dedicated metro planning authorities (such as Mumbai Metropolitan Regional Development Authority), which oversee overall infrastructure planning in metro regions, are headed by state-level ministers rather than a locally-elected representative. This lack of local accountability translates into lower voter engagement as well. For instance, in most cities and metros (apart from Mumbai), voter turnout for the most recent municipal polls was lower than the turnout in recent state elections. This is not an issue specific to India. Globally, local polls turnout is lower than larger elections

Another issue is lack of representation. A significant portion of urban residents, who live on the periphery of India’s metros, do not even come under the purview of city governments. An estimated 30% of the population across India’s six metros actually live outside the areas covered by their core municipal corporations.

Graphic by Sriharsha Devulapalli/Mint & Santosh Sharma/Mint
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Graphic by Sriharsha Devulapalli/Mint & Santosh Sharma/Mint

While some of these urban residents come under different corporations (e.g. Thane outside Mumbai and Gurgaon outside Delhi), others are treated as rural residents by state governments.

The 15th Finance Commission, like the previous finance commissions, could have much to say on these issues of city governance and finances. But in theory, the 72nd amendment already allows many of these issues to be addressed through state governments—whether the states themselves are forthcoming in decentralising further is another matter.

*This is the ninth of a 10-part data journalism series on life in Indian cities.

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