Financial Empowerment of City Governments

The Reserve Bank of India (RBI) recently published a report on municipal finances. The report compiles the budgetary data of 201 municipal corporations for the three years ending 2019–20. This is a major gain because no substantial efforts have been made so far to investigate municipal finances which is a much-ignored, but very important discipline of fiscal economics and urban development. Insights into the finances of municipal corporations could pave the way for the optimum use of available resources and help improve their governance capacity and welfare outcomes.

The importance of municipal finances emerges from the fact that the municipal corporations have a substantial role in securing the overall welfare of the urban population which is now estimated to be more than 460 million. The stakes will only get higher as another 400 million will be added to the urban population by 2050 when it will account for half of the total population.