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An RBI report on Municipal Finances highlights the fiscal health of municipal corporations in India.
The report examines the revenue generation capabilities and challenges faced by municipal corporations, focusing on their own sources of revenue and reliance on government transfers.
Fiscal Health of Municipal Corporations in India
In FY24, 50% of municipal corporations' revenue comes from own taxes, fees, and user charges.
25% of the revenue is from grants from the Central and State governments.
The remaining revenue comes from rental income, compensations, and investment income.
Municipal corporations have shown improvement in their ability to raise revenue independently, reducing their dependence on government grants.
How Municipal Corporations Get Revenues
Own Sources of Revenue:
Taxes: Property tax, water tax, electricity tax, education tax, and other local taxes.
Fees and User Charges: Charges for services like water supply, waste management, etc.
Rental Income: From municipal properties and assets.
Earnings from loans, investments, and compensations.
Transfers from Government:
Grants: Revenue grants from the Finance Commission and State Finance Commission.
Government Schemes: Reimbursement and contributions towards specific schemes from the Central and State governments.
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