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Improving the Fiscal Health of Indian Cities: a Pilot Study of Pune

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Improving the Fiscal Health of Indian Cities: a Pilot Study of Pune Improving the Fiscal Health of Indian Cities: A Pilot Study of Pune Draft Report Submitted by the National Institute of Public Finance and Policy 18/2 Satsang Vihar Marg Special Institutional Area New Delhi 110 067. India. Ph: +91-11-2656 9303, 2656 9780, 2656 9784, 2656 3305, 2656 9286 Fax: +91-11-2685 2548 Kala S. Sridhar, NIPFP Simanti Bandyopadhyay, NIPFP November 2007 TABLE OF CONTENTS LIST OF TABLES .......................................................................................................... 3 LIST OF FIGURES AND BOXES .................................................................................. 5 ACKNOWLEDGEMENTS ............................................................................................. 6 CHAPTER 1: INTRODUCTION .................................................................................... 9 Overview of Report ................................................................................................... 14 CHAPTER 2: PUNE MUNICIPAL CORPORATION (PMC)--FINANCES AND SERVICES.................................................................................................................... 15 Background ............................................................................................................... 15 PMC Finances: Expenditure ...................................................................................... 15 PMC Finances: Revenues .......................................................................................... 17 Physical Level of Services ......................................................................................... 24 Water Supply ......................................................................................................... 24 Sources and Distribution System:....................................................................... 24 Distribution Network: ........................................................................................ 25 Sewage .................................................................................................................. 26 Collection System: ............................................................................................. 26 Service Levels: ................................................................................................... 26 Proposed Projects: ............................................................................................ 27 Solid Waste ........................................................................................................... 28 Road Network ....................................................................................................... 30 Slums .................................................................................................................... 31 Street Lights .......................................................................................................... 32 CHAPTER 3: EXPENDITURE NEEDS ....................................................................... 33 Water Supply ............................................................................................................. 33 Solid Waste and Sanitation ........................................................................................ 38 Sewerage/Drainage .................................................................................................... 41 Municipal Roads ....................................................................................................... 43 Street Lights .............................................................................................................. 45 Total Expenditure ...................................................................................................... 46 CHAPTER 4: ANALYSIS OF REVENUES ................................................................. 51 Revenues in Pune: An Overview ............................................................................... 51 Per Capita Property Tax ......................................................................................... 52 Per capita Octroi .................................................................................................... 53 Per Capita Tax Revenue......................................................................................... 53 Per Capita Non-Tax Revenue ................................................................................. 54 Per capita own source revenue ............................................................................... 54 Per Capita Total Revenue ...................................................................................... 55 Revenue Capacity Estimations ................................................................................... 56 Appendix ................................................................................................................... 59 CHAPTER 5: ASSESSMENT OF FISCAL HEALTH .................................................. 63 Estimates of Fiscal Gaps ............................................................................................ 63 Data Caveats and Limitations .................................................................................... 66 References ..................................................................................................................... 69 2 LIST OF TABLES Table 1.1: Total Population, Pune UA, All Local Bodies, 1991 and 2001 ...................... 10 Table 1.2: Summary of Socio-demographic Data, With and Without PMC, Pune UA .... 10 Table 1.3: Households, Pune UA, All Local Bodies, 1991 and 2001 .............................. 11 Table 1.4: Household Size, All Local Bodies, Pune UA, 1991-2001 .............................. 11 Table 1.5: Percentage of SC/ST in Total Population ...................................................... 12 Table 1.6: Literacy Rate ................................................................................................ 12 Table 1.7: Workforce Participation ................................................................................ 13 Table 1.8: Agricultural Labor in Workforce ................................................................... 13 Table 1.9: Summary of Economic Base, All Local Governments, Pune UA ................... 14 Table 2.1: Property Categories in PMC ........................................................................ 18 Table 2.2: Collection Efficiency in Property Tax in PMC ............................................. 20 Table 2.3: Supply Statistics, Water Supply, PMC .......................................................... 25 Table 2.4: Existing Water Tariff Structure, PMC ........................................................... 26 Table 2.5: Supply Statistics, Sewerage System, PMC .................................................... 27 Table 2.6: Service Level Indicators, Sewerage, PMC ..................................................... 27 Table 2.7: Source-wise Quantity of Solid Waste Generated, PMC ................................. 28 Table 2.8: Solid Waste Management Indicators, PMC ................................................... 30 Table 2.9: Municipal Road Length, PMC ...................................................................... 31 Table 2.10: Comparative Growth of City and Slum Populations Over Time, PMC ........ 32 Table 3.1: Norms for Water Supply Used, by City Size ................................................. 35 Table 3.2: Summary of O&M/Revenue Expenditures on Water Supply, All Local Bodies, Pune UA ....................................................................................................................... 36 Table 3.3: PMC’s Capital Expenditure and Expenditure Gaps, Water Supply ................ 37 Table 3.4: Summary of Revenue Expenditures and Expenditure Gaps on Solid Waste and Sanitation, Pune UA ...................................................................................................... 39 Table 3.5: Summary of O&M Expenditures and Expenditure Gaps on Sewerage/Drainage, All Local Governments, Pune UA ................................................. 41 Table 3.6: Summary of Capital Expenditures and Expenditure Gaps on Sewerage/Drainage, PMC.............................................................................................. 42 Table 3.7: Summary of O&M Expenditures and Expenditure Gaps for Municipal Roads, All Local Governments, Pune UA ................................................................................. 44 Table 3.8: Summary of O&M Expenditures and Expenditure Gaps for Street Lights, All Local Governments, Pune UA ....................................................................................... 46 Table 3.9: Per Capita Total Expenditure, Local Governments, Pune UA ........................ 47 Table 3.10: Summary of O&M Expenditures and Expenditure Gaps for All Relevant Urban Services, All Local Governments, Pune UA ........................................................ 48 Table 3.11: Per Capita ‘Other’ Expenditure, All ULBs, Pune UA .................................. 50 Table 4.1: Property Tax Rates ....................................................................................... 51 Table 4.2: Collection Efficiency in Property Taxes ........................................................ 52 Table 4.3: Per Capita Property Tax (in Constant 1999-00 Prices) ................................... 53 Table 4.4: Per capita Octroi (in Constant 1999-00 Prices) .............................................
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