URBAN LOCAL SELF GOVERNMENT IN INDIA: INFRASTRUCTURE DEVELOPMENT AND PERFORMANCE ANALYSIS

INTRODUCTION:Governments at all levels have to play a major role in developing urban infrastructure which strengthens the base of an economy. Indian Constitutionhas provided for a three tiers federal structure (Union, State and Local) specifying the powers and responsibilities for all the tires of the governments. Therefore, it is the desired intention of the Constitution that all the tiers of the Governments work in a co -ordinated manner well within limits of the Constitution for urban infrastructure development. Third tier of Governments are generally termed as local self-governments and it has two wings, one which operates in the rural areas and the other in the urban areas. Constitutional status has been provided to these local governments through the 73th and 74th Constitutional Amendment Acts, 1992. Local self-governmentoperating in urban areas are commonly known as "Urban Local Self Governments".Prior to the Amendment Act, the plan for local infrastructure development were used to be drawn by the upper tier governmentswhere local requirement would not be considered. Therefore, the amendment is a direction to the state governments for transfer of power and responsibilities to the local governments with respect to preparation of plans for economic development and social justice, and also for the implementation of development schemes as may be required to enable the local governments to function as institutions of self-government. Unfortunately the issue of empowerment of the local selfgovernments has been left at the discretion of the state governments and as a result legislation primarily aims to make urban local bodies accountable to their stategovernment rather than to the citizens (The World Bank, 2007).Urban Local Self Governments (hereinafter referred to as ULSG) are of three types: (i) Nagar Panchayats for areas in transition from a rural area tourban area; (ii) Municipal Councils for smaller urban areas; (iii) Municipal Corporations for larger urban areas.India is also in the stage of rapid urbanization like other countries in the World and the constitution has provided different and concurrent list of works for different levels of governments. The role of ULGs, after becoming statutorily responsible for providing basic infrastructural facilities and maintenance of the same in the urban areas, has become more and more important.ULSGs find it difficult to balance between the limited financial resources and the unlimited needs for public services. (Tesu, 2011).FINANCIAL ANALYSIS OF ULSGs:ULSGs are statutorily responsible to carry out decentralized functions effectively and this requires presence of two important elements: adequate level of revenue either raised locally or transferred from the central government and the authority to make decisions about expenditures (Meddzi and Gondo, 2010). Finance of ULSGs consists of two major sources: own source and external source. Own source of receipts basically includes tax and non-tax receipts within the assigned power whereas external source constitutes a major portion of grant and assignments from upper tiers including contribution from others, loan from bank or financial institution and fund raised through issue of bonds.Psycharis and Iliopoulou(2016) have commented that local municipalities in Greece have a limited extent of tax or other forms of fiscal autonomy and therefore still rely heavily on fiscally centralized revenue sources. This situation also prevails in the ULSGs in India. Several literaturesshow that the dependency is due to the constitutional imbalance between the enormous functions and legitimate source of finances. ULSGs in India have lowest tax base (property tax, advertisement tax etc.)and upper tiers enjoy higher tax bases. Therefore,funds collected by the upper tiers are devolved to the lower levels of governments but not at the desired level. In order to resolve the imbalance, the amendment act has stated for constitution of state finance commission in every state which in addition to finance commission constituted by the central government. …