Improving the Fiscal Health of Indian Cities: A Pilot Study of Hyderabad 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 Satadru Sikdar, NIPFP December 2007 1 TABLE OF CONTENTS LIST OF TABLES ................................................................................................................................... 3 LIST OF FIGURES .................................................................................................................................. 5 ACKNOWLEDGEMENTS ...................................................................................................................... 6 CHAPTER 1: INTRODUCTION .............................................................................................................. 9 Background .......................................................................................................................................... 9 Overview of Chapter ............................................................................................................................. 9 Population and Socio-Demographic Characteristics ............................................................................. 10 Economic Base ................................................................................................................................... 11 Physical Characteristics ...................................................................................................................... 12 Education ........................................................................................................................................... 14 Local Public Services .......................................................................................................................... 15 Overview of Report ............................................................................................................................ 18 CHAPTER 2: WATER SUPPLY IN HYDERABAD UA ........................................................................ 19 Appendix ............................................................................................................................................ 27 CHAPTER 3: EXPENDITURE NEEDS AND GAPS ............................................................................. 28 Water Supply and Sewerage ................................................................................................................ 29 Solid Waste and Sanitation.................................................................................................................. 34 Municipal Roads ................................................................................................................................. 38 Street Lights ....................................................................................................................................... 40 Total Expenditure ............................................................................................................................... 42 All Expenditure with Other Services ................................................................................................... 46 CHAPTER 4: ANALYSIS OF REVENUES ........................................................................................... 52 Tax Revenues ..................................................................................................................................... 52 Non-Tax Revenue ............................................................................................................................... 54 Own Source Revenue .......................................................................................................................... 54 Grant .................................................................................................................................................. 57 Assigned Revenue .............................................................................................................................. 57 Total Revenue .................................................................................................................................... 58 Appendix ............................................................................................................................................ 63 CHAPTER 5: ASSESSMENT OF FISCAL HEALTH ............................................................................ 70 Revenue Capacity ............................................................................................................................... 70 Fiscal Gaps ......................................................................................................................................... 74 Concluding Remarks: Assessment of Fiscal Health.............................................................................. 76 REFERENCES ....................................................................................................................................... 78 2 LIST OF TABLES Table 1.1: Total Population and Growth Rate, Hyderabad UA, All ULBs, 1991 and 2001 ........................ 10 Table 1.2: Socio-demographic Characteristics of ULBs, Hyderabad UA, 2001......................................... 12 Table 1.3: Economic Profile of ULBs, Hyderabad UA, 2001 ................................................................... 13 Table 1.4: Pysical Features, Hyderabad UA............................................................................................. 13 Table 1.5: Availability and Coverage of Primary, Secondary and High Schools, Hyderabad UA, 2001 ..... 14 Table 1.6: Availability of Institutions of Higher Education, Hyderabad UA, 2001 .................................... 15 Table 1.7: Sources of Water Supply and Storage Systems, ULBs, Hyderabad UA .................................... 16 Table 1.8: System of Sewerage, ULBs, Hyderabad UA ........................................................................... 16 Table 1.9: Municipal Road Infrastructure, Hyderabad UA ....................................................................... 17 Table 1.10: Street Lighting and Household Coverage by Street Lights, ULBs, Hyderabad UA ................. 18 Table 2.1: Availability of Potable Water Supply, Hyderabad UA ............................................................. 20 Table 2.2: Expenditure on, and Revenues from Water Supply .................................................................. 22 Table 2.3: Status of Waste Water, Drainage and Storm Water, Hyderabad UA ......................................... 24 Table 2.4: Summary of Workforce Status and Characteristics, HMWSSB ................................................ 26 Table 2A.1: Water Tariffs, HMWSSB ..................................................................................................... 27 Table 3.1: Norms for Water Supply and Sewerage Used, by City Size ..................................................... 31 Table 3.2: Summary of O&M/Revenue Expenditures on Water Supply & Sewerage, All ULBs, Hyderabad UA ......................................................................................................................................................... 32 Table 3.3: Capital Expenditure and Expenditure Gaps, Water Supply and Sewerage, ULBs, Hyderabad UA .............................................................................................................................................................. 35 Table 3.4: Summary of Revenue Expenditures and Expenditure Gaps on Solid Waste and Sanitation, ULBs, Hyderabad UA ....................................................................................................................................... 37 Table 3.5: Summary of O&M Expenditures and Expenditure Gaps for Municipal Roads, All ULBs, Hyderabad UA ....................................................................................................................................... 39 Table 3.6: Summary of O&M Expenditures and Expenditure Gaps for Street Lights, ULBs, Hyderabad UA .............................................................................................................................................................. 41 Table 3.7: Summary of O&M Expenditures and Expenditure Gaps for All Relevant Urban Services, ULBs, Hyderabad UA ....................................................................................................................................... 43 Table 3.8: Summary of O&M Expenditures and Expenditure Gaps for Relevant Urban Services Excluding WSS, ULBs, Hyderabad UA ................................................................................................................... 45 Table 3.9: Per Capita Total Expenditure, ULBs, Hyderabad UA .............................................................. 47 Table 4.1 Property Tax Rates for MCH ................................................................................................... 53 Table 4.2 Descriptive Statistics for Per capita Property Tax Revenues in ULBs of Hyderabad (Rs, 99-00) .............................................................................................................................................................. 54 Table 4.3: Descriptive Statistics