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Income,2001/02
Local Government Organization and Finance: Urban India 199
Other states with high percentages include Haryana (69.7 percent),Orissa (50.6 percent),West Bengal (65.0 percent),Rajasthan (63.2 percent),and Uttar Pradesh (60 percent).Bihar stands with only 43 percent because of unpaid salaries.No norms exist for the division ofexpenditure between (a) salaries and wages and (b) operations and maintenance;therefore,it is not possible to ascertain whether these proportions are excessive.
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Expenditure on salaries and wages in several states exceeds what the municipalities collect by way oftaxes,levies,duties,and so forth.These states are unable to recover even the cost ofsalaries and wages,let alone maintain services.Inability to recover even the cost ofsalaries and wages from taxes and rates and charges is one ofthe key failings ofmunicipalities in India. This problem exists in the states ofHimachal Pradesh,Madhya Pradesh, Rajasthan,Uttaranchal,Uttar Pradesh,West Bengal,Manipur,and Tripura. Municipalities in such states depend on the state government to meet the cost ofsalaries and wages,as seen in table 5.12.
An important consideration in assessing the performance ofmunicipalities is the revenue surplus after accounting for salary and wage costs.The higher the surplus is,the greater are the flexibility and discretion in municipalities for operating and maintaining services.Salary and wage costs average 54 to 55 percent oftotal municipal expenditure.However,several states are able to post a higher surplus and are evidently able to use these surpluses for operation and maintenance ofservices.
TABLE 5.12 Cost ofSalaries and Wages Exceeds Own-Source Revenue Income, 2001/02
Percentage by which salary and Own-source wage cost exceeds Cost ofsalaries and wages revenue income own-source State (Rs per capita) (Rs per capita) revenue income
Himachal Pradesh 477.14 335.55 42.2 Madhya Pradesh 343.89 188.67 82.3 Manipur 62.10 41.55 49.4 Rajasthan 246.92 80.68 206.0 Tripura 313.52 58.93 432.0 Uttaranchal 254.91 113.67 124.3 Uttar Pradesh 165.11 79.54 107.6 West Bengal 317.70 215.77 47.2 Average ofsample states 312.58 482.14 –64.8
Source: Mathur and Thakur 2004. Note:Sample states refers to those states whose data are contained in the table.
