It analyzes budgetary data for Municipal Corporations (MCs), identifying opportunities, challenges and suggests measures to improve their financial health.

Key Findings 

• Low revenue collection: MCs generate only 0.6% of GDP in revenue (2023-24), much lower than central government (9.2%) and State Governments(14.6%). 
• Heavy reliance on transfers:MCs rely heavily on government transfers.Grants from Central and State governments have increased by 24.9% and 20.4%, respectively (2022-23)
• Increased municipal borrowings:It has risen from ₹2,886 crore (2019-20) to ₹13,364 crore(2023-24)
• Bonds:It totals ₹4,204 crore (0.09% of corporate bonds), with most bonds privately placed

Challenges in Municipal Finances: lower revenue compared to advanced economies, underdeveloped municipal bond market, low operational flexibility

Recommendations

• Enhancing Revenue Sources: Reform property tax (with use of GIS mapping), rationalize user charges
• Transfers from State governments: SFCS should recommend timely and predictable state transfers 
• Improvement in Cost Efficiency: by digitalization, use of  Public Private Partnerships in urban transport, waste management, and renewable energy
• Innovative Financing: Smaller MCs should explore options of Municipal Bonds, Green Bonds 
• Financial Transparency: Adopt of practices such as National Municipal Accounting Manual