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Metropolitan City Finances in India: Options for A New Fiscal Architecture

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Abstract

India will face great problems in finding a way to finance public services in its large cities in the next two decades. Backlogs in service levels and infrastructure are already great, and migration to urban areas will put even more pressure on state and local government budgets. Metropolitan cities have an economic base of significant size, but have not been empowered to tap this revenue potential. State governments have more ability to reach a buoyant tax base, and to borrow, but must also use these resources to provide statewide services and to tend to the servicing needs of poorer local governments. The Indian Constitution poses significant constraints on the financing options, and neither the Central Finance Commission nor the State Finance Commissions have shown the way out of this problem. One could correctly say that India has not successfully implemented a strategy to address the fiscal problems of metropolitan areas.

Suggested Citation

  • Roy Bahl, 2012. "Metropolitan City Finances in India: Options for A New Fiscal Architecture," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1233, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    • Handle: RePEc:ays:ispwps:paper1233
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    File URL: http://icepp.gsu.edu/files/2015/03/ispwp1233.pdf
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    References listed on IDEAS

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    1. Bandyopadhyay, Simanti & Rao, M. Govinda, 2009. "Fiscal health of selected Indian cities," Policy Research Working Paper Series 4863, The World Bank.
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    3. James Alm & Jorge Martinez-Vazquez & Sri Mulyani Indrawati (ed.), 2004. "Reforming Intergovernmental Fiscal Relations and the Rebuilding of Indonesia," Books, Edward Elgar Publishing, number 3152.
    4. Edward L. Glaeser & Joshua D. Gottlieb, 2009. "The Wealth of Cities: Agglomeration Economies and Spatial Equilibrium in the United States," Journal of Economic Literature, American Economic Association, vol. 47(4), pages 983-1028, December.
    5. Boadway,Robin & Shah,Anwar, 2009. "Fiscal Federalism," Cambridge Books, Cambridge University Press, number 9780521518215.
    6. Estache, Antonio, 2010. "Infrastructure finance in developing countries: An overview," EIB Papers 8/2010, European Investment Bank, Economics Department.
    7. Richard M. Bird & François Vaillancourt, 2006. "Perspectives on Fiscal Federalism," World Bank Publications - Books, The World Bank Group, number 6953, December.
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    Cited by:

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    2. Soumyadip Chattopadhyay, 2015. "Financing India’s Urban Infrastructure," Journal of Infrastructure Development, India Development Foundation, vol. 7(1), pages 55-75, June.

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