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Urban Local Bodies In India: Financial Control For Better Financial Performance

Author

Listed:
  • Sidhakam BHATTACHARYYA

    (National Institute of Technology, Durgapur, West Bengal, India)

  • Gautam BANDYOPADHYAY

    (National Institute of Technology, Durgapur, West Bengal, India)

Abstract

There is a constitutional imbalance between the functions and finances of Urban Local Bodies (ULBs) in India and most of these are grossly dependent on transfer of funds from upper tiers government. Financial performance of small and medium-sized ULBs is not satisfactory as there is inadequate transfer of fund from upper tiers of governments and inability on the part of ULBs to put their best efforts for mobilizing existing source of own revenues. In such a situation there should be an effective expenditure management system for better financial performance. Effective expenditure management begins with budgetary control system but budgets in Indian ULBs cannot be effectively used for this purpose. Therefore the authors suggest for exercising their recommended financial controls which help the ULBs to increase recurrent surplus or decrease recurrent deficit. Increase in recurrent surplus does not necessarily mean increase in percentage of recurrent surplus. The authors think that financial controls should be exercised as a management control process over the years and this will help the ULBs to increase the percentage of recurrent surplus or to decrease the percentage of recurrent deficit. They have established their views statistically through a case study applying regression methodology on population data collected from secondary source. They have used dummy dichotomous independent variables for presence or absence of financial controls along with other variables. The study ends with validation of the model using RMSE (Root Mean Square Error).

Suggested Citation

  • Sidhakam BHATTACHARYYA & Gautam BANDYOPADHYAY, 2012. "Urban Local Bodies In India: Financial Control For Better Financial Performance," Theoretical and Empirical Researches in Urban Management, Research Centre in Public Administration and Public Services, Bucharest, Romania, vol. 7(3), pages 24-37, August.
    • Handle: RePEc:rom:terumm:v:7:y:2012:i:3:p:24-37
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    References listed on IDEAS

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    1. Leah Platt Boustan & Fernando Ferreira & Hernan Winkler & Eric Zolt, 2010. "Income Inequality and Local Government in the United States, 1970-2000," NBER Working Papers 16299, National Bureau of Economic Research, Inc.
    2. Anatoliy GONCHARUK, 2011. "Making the Mechanism of Enterprise Performance Management," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(1), pages 58-72, June.
    3. Florinel Marian SGARDEA & Elena Monica SABAU & Mihai VUTA, 2011. "The Importance of Management Control in Monitoring the Pharmaceutical Industry Performance for Competitive Advantage," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(2), pages 465-472, December.
    4. Miyajima, Masaru & Nakai, Masato, 1986. "The municipal financial planning model: A simultaneous regression equations and goal programming approach," European Journal of Operational Research, Elsevier, vol. 27(2), pages 158-167, October.
    5. Monica Daniela TESU (PASCULESCU), 2011. "Ways to Finance Investments within the Local Public Administration," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 14(2), pages 492-499, December.
    6. World Bank, 2007. "India : Synthesis Study of Public Financial Management and Accountability in Urban Local Bodies," World Bank Publications - Reports 7666, The World Bank Group.
    Full references (including those not matched with items on IDEAS)

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