Municipal Finance in India : Municipal Tax Revenue sources

Municipal Revenue generation through Taxation in India

“Local Self Government becomes meaningless in the absence of financial autonomy. It enjoys the power of imposition of local taxes. The municipal bodies must have a wider scope of collection of revenues”

(Source: UIDSSMT)


ULBs have invented many channels and instruments of revenue generation in course of time due to urgency of handling growth, some of the tax sources both conventional and non-conventional, are mentioned below.

TAXES/FEES

CONVENTIONAL MUNICIPAL REVENUE SOURCES

Composite Property Tax

Water Charges

Sewerage Charges

Conservancy Charges

Building Permit Fee

Development Charges

Trade Licensing Fee

Advertisement Tax

Shop Room Rent

OTHER GENERAL MUNICIPAL REVENUE SOURCES

House Tax 

Show Tax  

Building Plan Fee

Tax on the consumption of Electricity    

Sale of liquor     

Cess on the transfer of immovable property   

License for Dangerous and Offensive trades

Rates are varied in respective ULBs

Rehari License Fee

Tehbazari Tax

Slaughter House Fee

Cattle Pound Fees

Birth & Death Certificate Fee

Copying Fee

Tree Cutting Fee

Library Membership

Ground Tax

Vehicle License Fee

Death & Birth Reg./ Late Fee

Forest /Garden Income

Dog License Fee 

Animal Tax (Cattle Pound)

Trade License Fee

Tax on advertisement other than advertisement published in the newspaper.

NON-CONVENTIONAL MUNICIPAL REVENUE SOURCES

Vacant Land Tax

Service Taxes

Surcharge on Land Registration Duty

Water Supply Donations

Water Supply Connection Charges

Water Benefit Tax

Water Betterment Charges

Sewerage Donations

Sewerage Connection Charges

Sewerage Benefit Tax

Sewerage Betterment Charges

Bulk Garbage Collection Charges

Betterment Charges

External Betterment Charges

Open Space Contribution

Impact fee

Transferable Development Right

Premium FSI

Sub-division charges

Planning Permission Betterment

Road Cutting Charges

Street Tax

Frontage Tax

Cess on Infrastructure

Motor Vehicle Tax/Surcharge

Tax on Petrol and Diesel

Business License Fee

Hoarding Charges,

Advertisement Placement Fees,

Cable TV Fee,

TV Advertisement Charges

Royalty on Auctions

INNOVATIVE /UNIQUE MUNICIPAL REVENUE SOURCES

General Obligation Bond/ Municipal Bond

Awarding of development rights,

Town planning schemes (TPS)

Plot/layout readjustment

Additional FSI/FAR

Goodwill auctions

Bank linkages (for Urban Poor)

Capital-based property tax system

Land banking

Transferable development rights (TDR)

Special Education tax

Pilgrim

Octroi

Special and General Sanitation

Shows

Toll on Vehicles,

Timber

Terminal

Menial Domestic Servants

Artisans

Entertainment Tax

SOME OF THE UNIQUE REVENUE STREAMS (THROUGH FEES/ CHARGES) OF MUNICIPALITIES ACROSS MAJOR STATES IN INDIA

Registration Fee

Mutation Fee

Market Fee 

Trade License Fee

Compounding Fee

Slaughter House Fee

License Fee

Betterment / Development Fee

Fire Brigade

Public Health

Swimming Bath Fee,

Stock Registration

Cattle Pound Fee

Teh Bazari Fee

Pilgrim

Scavenging

Prevention of Food Adulteration Fee

Dangerous and Offensive Trade License Fee

Animal Registration Fee

Compounding Fee

Warrant Fee

Bus Stand Fee

Copying Fee

Cart Stand Fee,

Encroachment Fee

Fees from burning ghats

Birth and Death Registration Fee

Sources:

cgg.gov.in/  (http://bit.ly/Jb35C5),

UIDSSMT / http://bit.ly/IkNKk0,

RBI / http://bit.ly/J8i70d

Rural Development Schemes in India

Some of the Schemes launched by Government of India (GoI) at present and in Past under deferent department and mission for Rural Development are listed below with the website link or relevant resources. 

Ministry of Rural Development-MoRD (http://rural.nic.in/)

Department of Rural development-DoRD (http://drd.nic.in/)

• Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) (http://nrega.nic.in/netnrega/home.aspx)
• Swarnjayanti Gram Swarozgar Yojna (SGSY) (http://sgsy.gov.in/)
• Pradhan Mantri Gram Sadak Yojna (PMGSY) (http://pmgsy.nic.in/)
• Indira Awaas Yojana (IAY) (http://iay.nic.in/netiay/home.aspx)
• National Social Assistance Programme (NSAP) (http://rural.nic.in/sites/downloads/right-information-act/06NSAP(F).pdf)

Department of Drinking Water Supply-DoDWS (http://ddws.gov.in/sites/upload_files/ddws/files/pdf/IECPlanwater2010-11.pdf)

• Total Sanitation Campaign (TSC) (http://tsc.gov.in/RuralSanitationNew/HomePage.aspx)
• National Rural Drinking Water Programme (NRDWP) (http://indiawater.gov.in/imisreports/nrdwpmain.aspx)

Department of Land Resouces-DoLR (http://dolr.nic.in/)

• National Land Records Modernization Programme (NLRMP) (http://dolr.nic.in/Nlrmp.htm)
• Integrated Watershed Management Programme (IWMP) (http://dolr.nic.in/iwmp_main.htm)

 Bharat Nirman (http://www.bharatnirman.gov.in/ )

• The Pradhan Mantri Gram Sadak Yojana (PMGSY), (http://pmgsy.nic.in/)
• Accelerated Irrigation Benefit Program, (http://wrmin.nic.in/writereaddata/mainlinkFile/File620.pdf)
• Rajiv Gandhi Grameen Vidyutikaran Yojana, (http://rggvy.gov.in/rggvy/rggvyportal/index.html)
• Indira Awas Yojana, (http://iay.nic.in/netiay/home.aspx)
• National Rural Drinking Water Program and (http://indiawater.gov.in/imisreports/nrdwpmain.aspx)
• Rural telephony. (http://cca.ap.nic.in/ruraltelephony.html)

By- Anoop Jha

Why public transport system should reach breakeven much before projected

Dilemma of perceived order and actual chaos

A case of typical buzzing metropolitan city of any developing country

Ever wondered while travelling in a suffocatingly overcrowded metro or local train that whether they might have shown similar huge footfall numbers in their design and financial reports? Don’t think so. Because they can’t!!

No guideline in the world allows such high density of footfall per unit area within any public transport system, because that is insane, that is inhuman. But unfortunately its happening, because huge gap of demand and supply. And we accept it, we don’t mind, we don’t question, we don’t have option, we not only accept it, we often praise it, of course public transport is a wonderful system of mass transit, but no wonder why a huge segment of population still prefer to travel by their own car, spending money and time like anything, just to get a private breathing space inside their personal car.

When it comes to transport numbers and financial projections for mass public transport system in overpopulated cities of developing countries, it’s usually purposefully flawed. Why? There is a catch. Metro and rail coaches are designed to accommodate a fixed maximum carrying capacity based on standards and international norms. Sounds good!! Because these standards consider the acceptable optimum and comfortable footfall/ ridership density as there thumbrule with some inbuilt tolerance for unexpected occasional growth in ridership and of course while doing design and financial projections for the MRT projects, consultants take these standard thumbrules as there basis for calculation with some contingency/ margin and they model there business plan as per this acceptable norms. They can’t show realistic overcrowded scenario in their financial calculations and projections because no financing agency/ bank/ partner will accept the model which is prepared by breaking the rule- like standard acceptable ridership density. Technically and morally they can’t propose a transport system which will be operating at an efficiency of 150-200% of its design capacity even if it is an inevitable case, because its unsafe, because it’s not acceptable on many grounds, at least they can’t disclose it in public domain otherwise there would be too much of hue and cry on the subject.  So when they come up with a financial projection with specified breakeven point, that breakeven point might not be realistic, it might be far beyond the actual realistic date. In actual overcrowded scenario more footfalls should help achieve breakeven point much early than projected.

It’s high time for those metropolitan cities which are struggling to provide an adequate and morally acceptable comfort level to its people, either in its transit system or may be in domain of housing and who repeatedly fail to provide the same due to unmanageable population growth and financial constraints, should recognize their constraints, and devise an operational methodology which is more realistic and suitable to their specific need.



May be they should accept inevitable higher population density and need to revise the ridership density thumbrule/ standards, reflecting real life scenarios of the city accepting their limitations, and should use the same in design and financial calculation. Understanding its limitations and inevitability of growth, may be a high density city needs a tougher and much robust metro and rail coaches with robust inbuilt facilities, robust air-conditioning system, higher air exchange rate, temper-proof interior, with more sophisticated audiovisual information system for fast and safe passenger exchange to avoid chaos due to confusion, may be they need better imbedded security system, may be they need to be educated in the school itself how to travel and behave in an overcrowded public transport system. May be they need to be educated in the planning schools to take into account real life scenarios while learning projections, maybe planners should be taught to challenge the validity and contextuality of thumbrules, established norms, methods and age old theories rather than simply imitating and following them in decades of inertia.  We will definitely have more and more sophisticated simulation tools for better understanding of the situation and more realistic projections, but we will still need human perception and judgment for a holistic planning which is beyond those formulas.

Some thoughts on socio-economic projections can be found here in another post titled “How reliable are socio-economic future projections?” http://planningurbanoregional.blogspot.in/2011/11/how-reliable-are-socio-economic-future.html

By- Anoop Jha

Perception of space – a function (f) of Space

Regional and Locational shift in Perception of space

Space function and origin

Perception of space in terms of physical location of observer plays a crucial part in understanding planning of urban built form and is a vital part of Urban Planning, but the roots of such perception emerges from regional level. It is also related to conditioning, space perceived by residents of mountainous, hilly and undulating terrain are totally different from space perceived by person living in  flat terrain. Similarly space recognized by a person who spent most of his life in sprawling rural setting  can be totally different than a person living in an urban setting, It can be either” a not so pleasant shock” or “a surprise” or “an aspiration” for an individual while changing their location from hills to plain or rural to urban or vice versa. Usually what happens is that people constantly living in mountainous and hilly terrain witness only finite view due to restrained field of view by mountains,  hills and valleys, and when they occasionally come to plain and see that there is no limitation on the field of view, when they realize that they can see upto the horizon, it’s a pleasant shock to them.

Similarly when a resident of sprawling plain terrain goes for a vacation to some hill station or otherwise, they find it as a one of the finest moments of their life, primarily because of limited and ever changing field of view provided by hilly city,  they have a totally different experience of space that is finite which they have never experienced in life living in plains. Similarly a person living in a rural setting with sprawling, sparse and low-rise settlement when encounter with a city with medium to high-rise and dense built form and architecture, its not the rush of city that strikes him most, it’s the “Built Form” that strikes him dumb, he curiously looks out of the window of train and bus and cab, to see the buildings touching the sky, public spaces formed and enclosed by surrounding buildings. Suddenly he finds himself enclosed and restrained in the built form of the city which provides finite field of view with claustrophobic environment which is a paradigm shift in perception from the earlier experienced freedom of unlimited perceived space of rural setting. 

Conservation Projects: From Liability to Asset

By : Anoop Jha

Architectural conservation has traditionally been considered as public or state responsibility and very few private entities are interested in taking up such projects, though state like Orissa is having Public Private Partnership (PPP) Model for conservation projects. A country with rich history and centuries of traditions like India has also rich Architectural assets which are often neglected and difficult to conserve due to its sheer abundance, Though national and international agencies like “Archeological Survey of India (ASI), UNESCO, etc. are taking active measures to conserve the heritage of India, but it seems that it’s time that private entities and investors should come forward to conserve the architectural heritage of Nation. I think it can prove to be quite a lucrative option for private investors if government acts as a facilitator and if some relaxation is given in heritage conservation planning process along with some incentives. It would prove to be a win-win situation for both public and private entities.

This is how it will work. Architectural conservation projects have few elements in common –

●      TECHNIQUES – its technical aspects of conservations projects, there are technical guidelines, policy norms, etc. it’s simply art of engineering.

●      HERITAGE VALUE – every historic architectural asset has a heritage value attached to it, and if methodically and convincingly approached by private agencies, government or public agency will certainly come forward to facilitate the conservation project of any nature, because conserved and maintained heritage is an asset for any state, which they often fail to take care of because of other pressing welfare responsibilities and limited financial resources.

●      EMOTIONAL VALUE – It has high perceived emotional value for, a Nation, a State, a certain group, or certain individuals, this high emotional value can be translated into monetary value with certain effort and proper strategy

●  UTILITARIAN VALUE – This is the most important aspect of any conservation project because this is what makes it as a commercial viable project, to make this model viable government will need to act as a facilitator and will have to draft special policy considering the special and sensitive status of such projects, policy also have to incorporate privet participation and related relaxation in terms of some norms and subsidies etc. to attract the investment from private investors.

Commercial Development Cost: PPP Projects

Cost Comparision of Commercial PPP projects 
(Cost in Rs. Cr.)

Post by: Anoop Jha

PPP based Water & Sewage Infrastructure Costing

By - Anoop Jha


Cost Comparison of Water Supply, WTP & STP PPP projects 
(Cost in Rs. Cr.)

PPP model water projects

Water related projects vary in scale as well as nature, which ranges from National level river water management to state level irrigation projects to city level flood management to neighborhood level water supply and distribution system. considering the widespread and vital nature of water system these projects demands huge capital and recurring investments in Operation and Maintenance (O&M). Governments revenue inflow might not be sufficient to take care of all demands of water related projects, so long term private participation has been encouraged in recent past in India for commercially viable and attractive projects mainly in form of public private partnership (PPP), mostly in urban infrastructure segments  like water supply and distribution as well as health and sanitation. larger project baskets like flood management, irrigation canals, dams, etc are primarily under control of state and central government.  

Cost of Parking Infrastructure

Cost Comparision of Parking, Multilevel Parking (MLP) & Automated Parking PPP projects 
(Cost in Rs. Cr.)

Multi Level Parking

Post by: Anoop Jha     

PPP based Solid Waste Management (SWM) Projects

By - Anoop Jha

By- Anoop Jha


COST COMPARISION  OF SOLID WASTE MANAGEMENT (SWM) PPP PROJECTS IN INDIA

(Cost in Rs. Cr.)

PPP for solid waste management 

Here are some cost comparison figures of Solid Waste Management (SWM) Projects in India based on Public Private Partnership (PPP). It appears that now focus of municipal bodies has started shifting towards waste to energy generation which would prove imperative for sustainable cities. Earlier dumping the waste at disposal sites or incineration were the only few possibilities for ever-growing city waste management, but emergence of new technology like plasma gasification and vitrification (PGV) is showing way forward for waste to energy generation possibilities in environmentally sustainable ways compared to other historically prevalent waste management options.

Source: www.pppindiadatabase.com

Urban Infrastructure : Investment Vs Operations and Maintenance (O&M)

Investment Vs O&M

Urban Infrastructure Cost

Per Capita Investment Cost by Sector

(Rs at 2009-10 prices)

Source:  Report on Indian  Urban Infrastructure and Services 

Per Capita Operations and Maintenance Cost (annual) by Sector

Source:  Report on Indian  Urban Infrastructure and Services 

Urban Infrastructure Investment Requirement (2012-31)

(Rs crore)

                            

Source:  Report on Indian  Urban Infrastructure and Services 

Operations and Maintenance Expenditure by Sector (2012-31)

Source:  Report on Indian  Urban Infrastructure and Services 

Pattern of per Capita investment in different urban infrastructure sectors and O&M cost are somewhat different from each other, while Urban Roads demands more capital investment , Water Supply, Sewage, SWM, Urban Road & Transport require more O&M investment. 

"Water utilities in India are typically able to recover only 30-35 per cent of the operations and maintenance (O&M) cost.Even with current levels of highly inadequate service, solid waste management accounts for 25-50 per cent of a ULB’s expenditure (World Bank 2006), but cities recover less than 50 per cent of the O&M cost, according to a study by the Ministry of Urban Development, Government of India. ULBs will be required to invest 54 per cent on capital investment and close to 25 per cent on the O&M of physical assets by 2021-22. In practice, user charges cover less than 50 per cent of the O&M cost of basic infrastructure services in India, on an average"

Source:  Report on Indian  Urban Infrastructure and Services 

Urban Infrastructure Investment Requirement in India : 2012-31

Urban Infrastructure Investment Requirement: 2012-31 (Rs crore).

Total Expenditure        3918670

 Urban Roads              1728941 

 Urban Transport         449426 

 Renewal and Redevelopment including Slums 408955 

 Water Supply             320908 

 Sewerage                   242688 

 Storm Water Drains   191031

 Capacity Building       101759

 Traffic Support Infrastructure    97985

 Solid Waste Management         48582

 Street Lighting            18580

 Other Sectors             309815

"Almost 44 percent of urban infrastructure investment over the 20-year period  is accounted for urban roads. The backlog for this sector is very large, ranging from 50 per cent to 80 per cent across the cities of India.  Sectors delivering urban services such as water supply, sewerage, solid waste management, and storm water drains account for  about 20 per cent"

Source:  Report on Indian  Urban Infrastructure and Services 2009-2010