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Om Prakash Mathur
the state and municipal initiatives taken to improve the finances and functioning of municipalities. We begin with an assessment of the size of the municipal sector and follow with an analysis of sector performance on a statewide basis, using three indicators: internal resource generation (own resources), municipal revenue receipts, and revenue expenditures. A number of features are noted. The size of the municipal sector in terms of what is raised through municipalities’ revenue efforts is tiny—0.63 percent of the gross domestic product (GDP). Between 1997/98 and 2001/02, however, the size of the municipal sector registered a marginal expansion, in terms of both its share in the total publicly raised revenues and combined GSDP. Municipal share in the total revenues of the three tiers of government rose from 2.84 percent in 1997/98 to 3.07 percent in 2001/02, while relative to GSDP, its share increased from 0.61 to 0.63 percent (table 5.9). Municipal own-source revenues (in nominal terms) have risen at an annual average growth rate of 10.32 percent. As a proportion of the combined GSDP, aggregate municipal expenditures have also risen from 0.74 percent in 1997/98 to 0.75, 0.77, and 0.75 percent respectively in the following years. Revenue expenditure is a proxy for service levels. The higher the expenditure is, the higher are the levels of services. The expenditure levels of municipalities in terms of size and trends, and also in terms of composition are given in table 5.10, in an attempt to distinguish between expenditure on salaries and wages (the nondiscretionary component) and other discretionary spending consisting of expenditures on the operation and maintenance of services. T A B L E 5 . 9 Revenue Significance of Municipalities Relative share of own-source revenues (%)
Year
1997/98 1998/99 1999/2000 2000/01 2001/02
Municipalities’ own-source revenue (Rs million)
Percentage of GDP
84,349 94,517 103,727 120,184 127,481
0.61 0.59 0.59 0.63 —
State Central Municipalities governments government
2.84 2.97 2.80 2.98 3.07
33.4 34.3 34.4 35.1 39.5
63.8 62.7 62.8 61.9 57.5
Source: Mathur and Thakur 2004. Note: — = not available. Figures for municipalities’ own-source revenues are adjusted to reflect the revenues for all statutory towns and cities.
