INNOVATIVE MUNICIPAL
RESOURCE MOBILISATION
Indo-US FIRE Project
and
Indore Municipal Corporation
INNOVATIVE MUNICIPAL RESOURCE
MOBILISATION
Contents :
INDO-US FIRE Project
Management Innovations for Municipal Resource
Mobilization
Case Study of Indore Municipal Corporation
FINANCIAL INSTITUTIONS REFORM
& EXPANSION (FIRE) PROJECT
Goal – Sustainable Delivery of Water and
Sanitation Services in India’s Cities.
FIRE started in 1994; continues through 2003.
Total of US$ 18 million in technical assistance and
training resources.
US$ 55 million in loan guarantees for water and
sanitation projects, with new USAID Development
Credit Authority (DCA) mechanism for credit
enhancement.
OBJECTIVES OF FIRE PROJECT
Development of Commercially Viable Urban
Infrastructure Finance System
Promotion of Private Sector Participation (PSP)
through development of CVIPs, including access
by the urban poor
Capacity Building of local and state governments
Implementation of 74th amendment and
decentralization
PARTNERS IN FIRE PROJECT
USAID
GOI / Ministry of Urban Development
Housing and Urban Development Corporation
(HUDCO)
Infrastructure Leasing and Financial Services Ltd.
(IL&FS)
National Institute of Urban Affairs (NIUA)
TCGI-PADCO
FIRE PROJECT SUPPORT
Ahmedabad Municipal Bonds
Tiruppur and Sangli Water Supply Projects
Improved Municipal Accounting System in TN
Kolhapur Solid Waste Disposal Project
Improving Access of Services to Poor, Ludhiana
Sukthankar Committee in Maharashtra
Urban Training Network/Urban Information
Resource Center
Model Municipal Law
MANAGEMENT INNOVATIONS IN
MUNICIPAL RESOURCE
MOBILISATION
NEED FOR MUNICIPAL RESOURCE
MOBILIZATION
Sources of revenue devolved to ULBs do not
match with the wide range of functions
Increasing dependence of ULBs on higher levels
of government
There is a mismatch between the functions
devolved to ULBs and the devolution of tax and
non-tax sources
TWO APPROACHES TO MUNICIPAL
RESOURCE MOBILIZATION
In order to mobilize resources on their own ULBs
can impose new taxes, increase tax/fee rates and
introduce management innovations within the
existing revenue structures.
Imposing new sources of revenue or increasing tax
fee rates require approvals from the elected
municipal council and/or state government and are
cumbersome and time-consuming.
MANAGEMENT INNOVATIONS IN
MUNICIPAL RESOURCE
MOBILIZATION
Various ULBs have opted for management
innovations within the existing legal revenue
structure, with the objective of improving
efficiency and strengthening municipal revenue
base.
AREAS OF INNOVATIONS
Management innovations taken up by ULBs to
improve their resources in the areas of:
(a) property tax administration;
(b) asset management;
(c) information system;
(d) user charges; and
(f) others.
PROPERTY TAX INNOVATIONS
Simplifications of Procedures
Management Information System
People-Friendly Bill Collection
Enforcement
Outsourcing
Communication
SIMPLIFICATION OF
PROCEDURES
Several ULBs introduced SAS to make property tax
assessments simpler and more transparent.
This method helps taxpayers to understand the
assessment process and removes the discretion of the
assessors to assess the properties in an arbitrary
manner.
It increases taxpayers’ involvement by allowing them
to calculate their own assessment within preestablished guidelines.
The Municipal Corporations of Hyderabad,
Banagalore, Indore and Chennai introduced SAS and
increased tax collection.
MANAGEMENT INFORMATION
SYSTEM
Use of Information Technology has helped ULBs to
improve not only the information base but also the
collection efficiency
The Indore Municipal Corporation (IMC)
computerized tax records thorough private operator,
conducted physical survey properties, and compared
data from different sources to identify non-assessed
properties.
MIS can help to take decisions and action.
Mirzapur created property tax maps and increased
the number of registered properties by 44 percent.
PEOPLE-FRIENDLY BILL
COLLECTION
Decentralized cash collection counters
Bill collection through banks
Bill collection electronic transfer
ENFORCEMENT
Once information is available, special campaign to
increase property tax revenue by forming special
collection teams is necessary.
Special power to teams to disconnect water supply
or drainage lines, attach the property of defaulters,
and issue arrest warrants for non-payment of
property taxes.
Major defaulters list published and put on web.
OUTSOURCING
Tax administration systems are labor intensive and
sometimes the cost of collection exceeds the
revenue collected.
Outsourcing can improve efficiency and save cost.
The Municipal Corporation of Ludhiana (MCL),
for example, introduced a courier system for bill
distribution.
The Indore Municipal Corporation used private
firms to identify non-assessed properties and
conduct physical survey.
COMMUNICATION
The various ULBs involved the public in
determining the revised tax rates by consulting
resident welfare associations. Tax education and
publicity campaigns, including newspaper
advertisements.
Communication through email.
Tax information can be made available on web.
ASSET MANAGEMENT
Proper inventory of assets and its regular updation
Computer database of properties
Developing strategy for optimal use of assets
OPTIMAL USE OF MUNICIPAL
PROPERTIES
FIRE Project provides assistance to ULBs to
enhance their revenue base from non-performing
real estate assets
Local engineering/ Valuation firm appointed to
identify various properties of ULB
A Real estate consultant firm appointed to suggest
optimal utilization and disposal strategies for the
identified assets that will lead to revenue
generation
OPTIMAL USE OF MUNICIPAL
PROPERTIES
This is being conducted in four stages:
Real Estate Market Analysis of ULB
Disposal Strategy for the identified real estate
portfolio
Approach Paper to provide a framework for such
exercises in the future for the ULB
Approach Paper for showcasing this opportunity
to other municipal corporations
Scope of Study
City Overview
Developing
Areas
Existing
Areas
City divided into two
Vijay Nagar
distinct parts:
Industrial Area
New City and Old
Old City
City
City expanding along
Khajrana
Old CBD
all four directions
Maximum
towards
and
directions
New CBD
Geeta
Bhavan
growth
Northern
Eastern
New
City
Rajendra
Nagar
USER CHARGES
Levying Sewerage Charges
State Guidelines for Water Charges
Pay and Park Scheme
Eco Fee
Charges for Collecting Solid Waste
Fees for “Tatkal” Delivery of Services
Advertisement Tax
Cable Charges
Street Tax
LESSONS LEARNED
Improved Management Information System
Simplification of Billing Processes
People Friendly Bill Collection
Communications
Local Leadership/ Champion
LESSONS LEARNED
Project Specific Contribution
Outsourcing the Services
Enforcement
State Government Guidelines
Resource Mobilization is part of overall
CDS/Corporate Plan/Visions Exercise
CDS Formulation
Capital Investment Program
Situation Analysis
Legal / Systems
Municipal Acts
•Taxation Powers
•Borrowing Provisions
•Budgeting Systems
•Accounting Practices
Finances
•Sources & Uses of funds
•Base and basis of levy of
major taxes and charges
•Collection issues
•Uses
•Rate of growth
•Per-capita Analysis
Services
•Current levels of services
•Water supply
•Sanitation
•Roads
•Solid Waste Management
•Drainage
•Lighting
Strategic Plan
Project Identification &
Facility Siting
• Sectoral Strategies
• Integration of Line
Agency Projects
• Public Priorities
•Rates of growth
•Revenue revision assumptions
•Collection performance
•Expenditure growth Assumptions
•Assumption on O&M for new
investments
•Lending options
• - Loan grant mix
• - Loan terms
Financial
and
Operatin
g Plan
Sustainable
Investment
Capital Investment
Need
City Development Strategy