Financial Implications of Upgrading Municipal Services: a Normative Assessment/ Mukesh P. Mathur and Satpal Singh

Keeping in view the fact that the prevailing system of local governance in India has not been successful to the extent envisaged, specifically in the context of providing effective and efficient services to all segments of the society, this paper provides an insight into the many financial constraints faced by the local bodies in India. It attempts to assess the financial requirements of core municipal services by the year 2005. Norms and standards suggested by the various committees and expert groups have been considered for estimating the investment requirements. According to the authors, every year nearly 15 per cent of the total estimated investment required would be used up by the local bodies for debt servicing. Further, about Rs.66,797 crores (at 1996-97 prices) would be required over a period of next six years, i.e. 2000-2005, to operate and maintain the core services at levels proposed by the Zakaria Committee. The authors highlight the recommendations of the State Finance Commissions and suggest that these be implemented in an appropriate manner so that local bodies could perform their functions and responsibilities on a sustained basis.