International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
ISSN 2319 - 4847
Special Issue for National Conference On Recent Advances in Technology and Management for
Integrated Growth 2013 (RATMIG 2013)
Financial Management by Urban Self governing
body especially Municipal Corporation (Mahanagar
Palika) with special reference to the Nagpur
Municipal Corporation
Prof. Atul S. Daware
Department of Management Studies, Nabira Mahavidyalaya Katol
atul_daware@rediffmail.com
Keywords: Self governing body, Operating Income, Utilization Ratio, Financial Management, Municipal Corporation
Introduction
In India we have democratic government not only at central and state level but at local level as well. The government at local
level is often known as local self government because it provides opportunity to the people to govern themselves. The people
in village or town known their problem best so there is a system under which a village or a town also has its own small
government, run by the local people.
Local self government gives basic training in effective participation of the people in administration and in democratic way of
living. Moreover participation of local the local people make the government more responsive to the need of area.
The foundation of modern system of urban government was laid by British Government. Lord Mayo's resolution of 1870
made arrangement for strengthen the municipal institutions and increasing the association of Indians in these bodies. However
it was Lord Ripons resolution of 1882 that was hailed that Magna Carta of local Government and got Lord Ripon the title of
'father of local self Government.' in India. Seventy fourth Amendment act provide foundation of a municipal corporation for a
large urban area on municipal council for smaller urban area.
Local self govt. bodies in big city are called corporation. Corporation of big cities are setup by law of their respective state
legislature. The legislature specifies the power of bodies. They also allocate them some sources of revenue by which they can
carry on their work. But most municipal corporation have to take money from their state Govt. municipal corporation usually
deals with the state Govt. directly. Municipal Corporation has large number of responsibilities. They have to maintain
essential services of the city like electricity, water supply, cleaning & lightning of street, they have to take measures to prevent
diseases and epidemics in their cities. They run fire brigade, maintains Zoo Public Park & museum. All births and deaths have
to register to Municipal Corporation.
Doing all things naturally need money. Municipal Corporation like govt. have their own resource of income. Some of their
income comes from taxes which the residents pay like house and property tax. It can impose taxes or fees on cars & trucks
and other vehicles.
The most important body of Municipal Corporation is its council. The council is cities legislature. It consists of members who
are called municipal councilor. Municipal Corporation has a mayor who is cities most important official. Mayor is elected by
people directly. Corporation is divided between various committees and undertaking made up of its members. Municipal
Corporation also has an executive officer who is
Nagpur Mahanagar Palika (NMC)
Organized By: GNI Nagpur, India
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
ISSN 2319 - 4847
Special Issue for National Conference On Recent Advances in Technology and Management for
Integrated Growth 2013 (RATMIG 2013)
The Municipal Council for Nagpur was established in 1864. At that time, the area under the jurisdiction of the Nagpur
Municipal Council was 15.5 sq. km and the population was 82,000.The duties entrusted to the Nagpur Municipal Council
were to maintain cleanliness and arrange for street lights and water supply with government assistance. In 1922, the Central
Provinces & Berar Municipalities Act was framed for the proper functioning of the Municipal Council.
On 22nd January 1950, CP & Berar Act No. 2 was published in the Madhya Pradesh Gazette which is known as the City of
Nagpur Corporation Act, 1948 (CNC Act). The Municipal Corporation came into existence in March 1951. The first
development plan of the city was prepared in 1953. In the year 1956, under the state reconstitution, the Berar Province merged
into the Maharashtra State with Mumbai being recognized as its capital; in 1960, Nagpur was declared as the second capital of
the state.
Urban Self Governing Bodies is responsible for administering and providing basic infrastructure to the city.
Building and Maintenance of roads, streets and flyovers.
Public Municipal schools
Water purification and supply
Hospitals
Street lighting
Maintenance of parks and open spaces
Sewage treatment and disposal
Garbage disposal and street cleanliness
Urban development and city planning of new areas.
Registering of births and deaths.
Financial Management
"Financial Management is the application of the planning and control functions to the finance function
1
".
Figure1. Financial Management
Local Government can make an important contribution to public well being through the execution of government policies and
the delivery of local public services. Local government also has the potential to be the most transparent and accountable level
of government. Full realization of that promise, however, requires strong fiscal administration to ensure that citizen interests
are reflected in local programs; policies are conducted in a fiscally sustainable way; and resources are not lost through
inefficient, ineffective, wasteful, or corrupt operations. State and local governments have made great strides in measuring and
improving performance over the last two decades. This is partly a response to economic crises, decreasing revenue streams,
and cuts in state and federal funding. It is in this context that improved public financial management and accountability is
crucial not only for better governance, but also for improved service delivery.
Financial Management during 2005-10
1
Archer and Ambrosio
Organized By: GNI Nagpur, India
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
ISSN 2319 - 4847
Special Issue for National Conference On Recent Advances in Technology and Management for
Integrated Growth 2013 (RATMIG 2013)
The financial management for this research has been restricted to following parameters:
Operating Income
Utilization Ratio
Operating Income
Income and expenditure account is prepared by non-trading concern to reveal the surplus or deficit arising out of the operating
activities during the accounting period. It is one of the final accounts of non-trading concern like the profit and loss account of
trading concern. All the revenue incomes during the accounting period are shown on income side and all of the revenue
expenses during the period are shown to debit (expenditure) side of income and expenditure account. The operating profit has
been calculated for self governing bodies by taking a difference between the Revenue and Expenditure.
Operating Income = Revenue - Expenditure
Utilization Ratio
The utilisation ratio has been calculated for the expenditure calculated for each of the financial year considered for the
respective self-governing-body. The utilisation ratio for this research study thus can be calculated as the percent of amount
used for different heads out of the total expenditure occurred in a particular financial year.
Utilisation Ratio (UR) = (Expense Head / Total Expenditure) x 100
Operating Income for NMC
The revenue and expenditure for the NMC for the period considered for this research study has been as shown in the
following table.
Table 1: Revenue and Expenditure
Year
Revenue
Expenditure
2005-06
3607558
3407722
2006-07
3007248
3285731
2007-08
3380453
3327085
2008-09
3963979
3858551
2009-10
4609612
4605735
Total
1,85,68,850
1,84,84,824
It can be seen from above table that the expenditure has been within limits and the gross expenses are less than the total
revenue generated for the NMC during 2005-10.
5000000
4000000
3000000
Revenue
2000000
Expenditure
1000000
0
2005-06 2006-07 2007-08 2008-09 2009-10
Figure 2: Revenue and Expenditure
Organized By: GNI Nagpur, India
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
ISSN 2319 - 4847
Special Issue for National Conference On Recent Advances in Technology and Management for
Integrated Growth 2013 (RATMIG 2013)
It can be seen from above bar diagram that except the financial year 2006-07; the expenditure has been within the limits of the
revenue generated during the respective financial years.
Revenue and Expenditure Heads
Table 2: Revenue Heads
Revenue
Particulars
Municipal Rates and Taxes
Realization Under Special Acts
Revenue from Property
Grants
Misc
Extraordinary Debit
Total
2005-06
2225689
83739
39205
202335
196098
860492
3607558
2006-07
2309091
82065
46808
300083
147503
121698
3007248
2007-08
2549940
82163
51252
407231
147585
142282
3380453
2008-09
2781109
98066
50151
380063
217856
436734
3963979
2009-10
3108920
96855
53363
374953
253044
722477
4609612
The sources of revenue for the NMC have been as categorized in the above table which include; Municipal Rates and Taxes,
Realization under Special Acts, Revenue from Property, Grants and Extraordinary Debit.
Particulars
General Admin
Public Safety
Public Health
Public Instruction
Misc
Extraordinary Debt
Total
Table 3: Expenditure Heads
Expenditure
2005-06 2006-07 2007-08
459172
429422
490625
198961
238522
214812
1800811 1758110 1748031
320971
338733
376440
110877
96743
242697
516930
424201
254480
3407722 3285731 3327085
2008-09
625430
199935
2059680
372398
154225
446883
3858551
2009-10
622344
237473
2061638
423175
145587
1115518
4605735
The expenditure for the NMC has been as categorized in the above table which include; General Administration, Public
Safety, Public Health, Public Instruction and Extraordinary Debt.
Utlisation Ratios
The utilisation ratio has been calculated for the expenditure calculated for each of the financial year considered for the
respective self-governing-body. The utilisation ratio for this research study thus can be calculated as the percent of amount
used for different heads out of the total expenditure occurred in a particular financial year.
Financial Year: 2005-06
Heads
Table 4: Utlisation Ratio 2005-06
Expenditure
UR (%)
General Admin
459172
13.47
Public Safety
198961
5.84
Organized By: GNI Nagpur, India
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
ISSN 2319 - 4847
Special Issue for National Conference On Recent Advances in Technology and Management for
Integrated Growth 2013 (RATMIG 2013)
Public Health
1800811
52.85
Public Instruction
320971
9.42
Misc
110877
3.25
E Debt
516930
15.17
Total
100.00
It can be seen that more than half of the expenditure (52.85%) incurred has been spent in Public Health. The next heads of
expenditure have been the extra-ordinary debt, general administration, public instructions and public safety in the decreasing
order.
Financial Year: 2006-07
Table 5: Utlisation Ratio 2006-07
Heads
Expenditure
General Admin
429422
Public Safety
238522
Public Health
1758110
Public Instruction
338733
Misc
96743
E Debt
424201
Total
UR (%)
13.07
7.26
53.51
10.31
2.94
12.91
100.00
It can be seen that more than half of the expenditure (53.51%) incurred has been spent in Public Health. The next heads of
expenditure have been the extra-ordinary debt, general administration, public instructions and public safety in the decreasing
order.
Financial Year: 2007-08
Table 6: Utlisation Ratio 2007-08
Heads
Expenditure
General Admin
490625
Public Safety
214812
Public Health
1748031
Public Instruction
376440
Misc
242697
E Debt
254480
Total
UR (%)
14.75
6.46
52.54
11.31
7.29
7.65
100.00
It can be seen that more than half of the expenditure (52.54%) incurred has been spent in Public Health. The next heads of
expenditure have been the extra-ordinary debt, general administration, public instructions and public safety in the decreasing
order.
Financial Year: 2008-09
Table 7: Utlisation Ratio 2008-09
Heads
Expenditure UR (%)
General Admin
625430
16.21
Organized By: GNI Nagpur, India
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
ISSN 2319 - 4847
Special Issue for National Conference On Recent Advances in Technology and Management for
Integrated Growth 2013 (RATMIG 2013)
Public Safety
Public Health
Public Instruction
Misc
E Debt
Total
199935
2059680
372398
154225
446883
5.18
53.38
9.65
4.00
11.58
100.00
It can be seen that more than half of the expenditure (53.38%) incurred has been spent in Public Health. The next heads of
expenditure have been the extra-ordinary debt, general administration, public instructions and public safety in the decreasing
order
Financial Year: 2009-10
Table 8: Utlisation Ratio 2009-10
Heads
Expenditure
General Admin
622344
Public Safety
237473
Public Health
2061638
Public Instruction
423175
Misc
145587
E Debt
1115518
Total
UR (%)
13.51
5.16
44.76
9.19
3.16
24.22
100.00
.It
can be seen that more than half of the expenditure (44.76%) incurred has been spent in Public Health. The next heads of
expenditure have been the extra-ordinary debt, general administration, public instructions and public safety in the decreasing
order.
Conclusion
From above it is seen that the major expenditure during 2005-10 has been done on the Public Health by Nagpur Municipal
Corporation. And rest of the expenses on General administration, Public safety. E Debt etc. respectively.
References
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[6] TRYSEM, Rural Development and Employment Generation, Khadi Gramodyog, Volume 41 (120), Sep’1995, p. 626-629
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Authour
Organized By: GNI Nagpur, India
International Journal of Application or Innovation in Engineering & Management (IJAIEM)
Web Site: www.ijaiem.org Email: editor@ijaiem.org, editorijaiem@gmail.com
ISSN 2319 - 4847
Special Issue for National Conference On Recent Advances in Technology and Management for
Integrated Growth 2013 (RATMIG 2013)
Prof. Atul S. Daware received B.E (Mechanical Engg.). From YCCE Nagpur and also done M.tech (Thermal Engg.), MBA,
LL.B,M.A in Public Administration .Recently Submitted Ph.D Thesis to RTM Nagpur university. And working as Asst.
Professor in DMS, Nabira Mahavidyalaya Katol from last 6 yrs.
Organized By: GNI Nagpur, India