Assessing The Financial Health Of City Municipal Corporations: A Comparative Study

Municipal governments in India are vested with the statutorily responsibility for the provision and maintenance of basic infrastructure and services in cities and towns. Additionally they have been assigned a range of planning functions through the state legislature and other administrative orders. The objective is to ensure that suitable levels of infrastructure and services are available to the citizens. In many parts of India, the quality of life in urban areas is miserable and the citizens lead a difficult life. To overcome this problem, a series of reforms have been initiated by the Indian government to strengthen local-level governance. The main objective of this paper is to evaluate the financial health of Belgaum City Corporation and Bellary City Municipal Corporation for the period of five years. Municipal Corporations are generating small revenue surplus with low resource gaps. More than that, they are spending lower than that required for providing a minimum level of civic amenities. Improved financial management is required to increase efficiency in revenue collection and expenditure control. Therefore the financial health of an urban local body (ULB) is indicated by a set of closely interrelated factors and not merely income-expenditure balance. The present paper intend to diagnose the financial health of urban local bodies in general and city municipal corporation in particular considered so as to measure the efficiency in financial management .For this broad d objective the following parameters have been identified. so as to assess the financial performance of the sample city municipal corporation in Karnataka. Growth Rate of Total Income, Growth Rate of Total Revenue Growth Rate of Income over Expenditure, Growth Rate of Property Tax, Growth Rate of Total Expenses, Growth Rate of Administrative Expenses, Growth Rate of Financial Expenses, Growth Rate of Service Related Direct Expenses. The study concluded that it would be desirable for City corporations to get into the process of monitoring their own performance in terms of net surpluses or deficits on a regular basis. In the view of the above, the approach to urban development and management should be the prime focus of the municipal corporations.