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Financial management and service delivery: a nonparametric analysis for Indian cities

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  • Simanti Bandyopadhyay

Abstract

The main objective of the paper is to assess the performance of urban local governments in India taking the physical levels of services provided by them as the ‘outputs’ and the expenditures on resources to provide these services as ‘inputs’ in an integrated framework and pinpoint some possible sources of mis-utilization of resources. We use nonparametric two-stage data envelopment analysis technique to derive the efficiency scores, with a subsequent analysis of slacks associated with the optimization exercise which quantifies the extent of mis-utilization of resources. The main findings suggest that the city governments can provide the same levels of services by using resources lesser by 27 % of what they currently use. We also find that the extent of unproductive spending and under-provision of services are more pronounced in smaller cities. Mis-utilization of resources in factors like establishment and laborcost is more pronounced as the establishment expenditures and contractual payments in the laborcost component involve more leakages. Copyright Springer-Verlag Berlin Heidelberg 2015

Suggested Citation

  • Simanti Bandyopadhyay, 2015. "Financial management and service delivery: a nonparametric analysis for Indian cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(3), pages 721-751, May.
    • Handle: RePEc:spr:anresc:v:54:y:2015:i:3:p:721-751
    DOI: 10.1007/s00168-015-0673-1
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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.
    2. Charnes, A. & Cooper, W. W. & Rhodes, E., 1978. "Measuring the efficiency of decision making units," European Journal of Operational Research, Elsevier, vol. 2(6), pages 429-444, November.
    3. De Borger, B & Kerstens, K. & Moesen, W. & Vanneste, J., 1994. "Explaining Differences in Productive Efficiency: An Application to Belgian Municipalities," Public Choice, Springer, vol. 80(3-4), pages 339-358, September.
    4. Simanti Bandyopadhyay, 2011. "Finances of Urban Local Bodies in Jharkhand: Some Issues and Comparisons," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1113, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    5. Simanti Bandyopadhyay, 2012. "Performance Evaluation of Urban Local Governments: A Case for Indian Cities," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1232, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. Grossman, Philip J. & Mavros, Panayiotis & Wassmer, Robert W., 1999. "Public Sector Technical Inefficiency in Large U.S. Cities," Journal of Urban Economics, Elsevier, vol. 46(2), pages 278-299, September.
    7. M. Govinda Rao & Richard M. Bird, 2011. "Coping with Change: The Need to Restructure Urban Governance and Finance in India," IMFG Papers 04, University of Toronto, Institute on Municipal Finance and Governance.
    8. R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
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    More about this item

    Keywords

    C6; H4; H7; R1; R5; R15;
    All these keywords.

    JEL classification:

    • C6 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling
    • H4 - Public Economics - - Publicly Provided Goods
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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