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Assessments of Municipal
Finances for the city of Mehasana
Finance Group
Water supply and Sanitation
Lab.
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Revenue
IncomeCapital Income
RevenueExpenditure
CapitalExpenditure
MunicipalFinance
Total
Income
Total
Expenditure
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0.0
200.0
400.0
600.0
800.0
1000.0
1200.0
1400.0
1600.0
1800.0
Rs.
Mehsana and other cities (2010)
per capita revenue receipts Per capita revenue expenditure
Source: www.pas.org.in
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Operating Ratio (2010)
(Revenue Expenditure) %
Revenue Receipts
0.00
0.50
1.00
1.50
2.00
2.50
Source: www.pas.org.in
Compared to other cities, Mehsana has the lowest O.R, due to a very low
revenue expenditure.
The amount spend per person is very low in Mehsana.
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Efficiency RatiosOperating Revenue Surplus
Total Revenue Surplus
Debt Serving Capital Ratio
*Own sources include Tax income from own sources and Assigned sources
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Operating Revenue Surplus
(Total Revenue Income-Total Revenue Expenditure)
%
Total Revenue Income
In crores2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
20072010/
2011
2011/
2012
Revenue Income 9.42 7.05 8.90 10.41 12.55 12.00 14.12 27.35 20.82
Revenue Expenditure 6.78 5.61 5.38 6.48 9.20 6.31 9.80 14.16 10.82
Operating Revenue
Surpus(%)28.04 20.51 39.54 37.74 26.67 47.39 30.56 48.21 48.02
Favourable Good Moderate Poor
>50% >35% >15%
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Total Revenue Surplus
(Total Income-Total Expenditure) %
Total Income
In crores2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
20072010/
2011
2011/
2012
Total Income 10.0 7.1 9.0 10.8 13.7 12.4 14.7 31.1 25.1
Total Expenditure 9.9 8.2 7.9 9.5 13.8 11.2 17.5 23.2 19.2
Revenue
Surplus(%)1.7 -15.9 12.1 11.6 -1.2 9.3 -19.4 25.4 23.5
Favourable Good Moderate Poor
>40% >25% >10%
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Debt Serving Capital Ratio
Debt Serving* %
Revenue Income
In crores 2000/2001
2001/2002
2002/2003
2003/2004
2004/2005
2005/2006
2006/2007
2010/2011
2011/2012
Debt Serving 0.2 0.3 0.1 0.2 0.0 0.2 0.6 0.7 0.0
Revenue Income 9.4 7.1 8.9 10.4 12.6 12.0 14.1 27.3 20.8
Debt ServingCredit ratio %
2.5 4.0 1.0 1.6 0.3 1.5 4.1 2.7 0.0
Includes Principle repayment and Interest Paid On LoansDSCR Should not be Greater than 30%
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COMPOSITION OF EXPENDITURE AND
INCOME
56%
4%
35%
5%
INCOME SPLIT
RIOST RIOSNT RI CI
29%
33%2%
36%
EXPENDITURE SPLIT
REE REOM REDS CE
INCOME:
Revenue IncomeOwn Source Tax
Own Source-Non tax
From grants and Contributions
Capital Income
EXPENDITURE:
Revenue ExpenditureEstablishment Expenditure
Operations and Maintanance
Debt Serving
Capital Expenditure
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Income RatiosShare of Own sources* in Total Revenue
Income
Share of Tax Income in Total Revenue Income
*Own sources include Tax income from own sources and Assigned sources
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Share of Own sources in Total
Revenue Income
Total Income from Own Sources %
Total Revenue Income
In crores2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
20072010/
2011
2011/
2012
Own Source Income 8.1 5.8 4.8 6.5 7.6 6.5 8.1 17.3 13.6
Revenue Income 9.4 7.1 8.9 10.4 12.6 12.0 14.1 27.3 20.8
Share of own source
income to total
income
86.1 82.9 54.0 62.4 60.6 54.5 57.7 63.2 65.3
Favourable Good Moderate Poor
>80% XX XX
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Share of TAX income in Total
Revenue Income
Total Income from TAX %
Total Revenue Income
In crores2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
20072010/
2011
2011/
2012
Tax Income 7.8 5.6 4.6 6.3 7.4 6.2 8.0 15.1 11.7
Revenue Income 9.4 7.1 8.9 10.4 12.6 12.0 14.1 27.3 20.8
Share of TAX income
to total income83.2 79.4 52.1 60.3 59.0 51.8 56.4 55.2 56.4
Favourable Good Moderate Poor
XX XX XX XX
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Key Findings
0
10
20
30
40
50
60
70
80
90
100
Percentage
Year
Share of Income From Tax Sources
Data
Missing
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Key Findings
Octroi was a important source of taxfor the municipality having a significant
share till 2001.
After the abolishment of Octroi, theshare of tax income came down
significantly.
Property tax is the single mostimportant municipal tax contributing to
40% of tax income.
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Expenditure RatiosCapital Expenditure Ratio
Establishment Expenditure %
Operation and Maintenance Expenditure %
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Capital Expenditure Ratio
Total Capital Expenditure %
Total Expenditure
In crores2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
20072010/
2011
2011/
2012
Capital
Expenditure 3.1 2.6 2.5 3.1 4.6 4.9 7.7 8.1 7.7
Total Expenditure 9.9 8.2 7.9 9.5 13.8 11.2 17.5 23.2 19.2Capital
expenditure ratio 31.3 31.4 31.8 32.1 33.5 43.7 44.1 35.1 40.0
Favourable Good Moderate Poor
>40% >20% >10%
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Establishment Expenditure %
Establishment Expenditure %
Total Revenue Expenditure
In crores2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
20072010/
2011
2011/
2012
Establishment
Expenditure3.0 2.1 3.3 3.6 3.8 4.7 4.8 3.8 2.9
Total Revenue
Expenditure 6.78 5.61 5.38 6.48 9.20 6.31 9.80 14.16 10.82
Establishment
expenditure %44.8 36.7 60.9 56.3 41.3 74.7 48.9 26.9 26.7
Favourable Good Moderate Poor
XX XX XX XX
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ESTABLISHMENT
EXPENDITURE COMPOSITION
5%4%
30%
4%
3%3%
42%
9%
General Administration
Other Taxes
Refund
General Conservancy
T.P.Scheme
Misc
DepositOthers
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Operation and Maintenance
Expenditure %
O & M Expenditure %
Total Revenue Expenditure
In crores2000/
2001
2001/
2002
2002/
2003
2003/
2004
2004/
2005
2005/
2006
2006/
20072010/
2011
2011/
2012
O&M
Expenditure3.5 3.3 2.0 2.7 5.4 1.4 4.4 9.6 7.9
Total Revenue
Expenditure 6.78 5.61 5.38 6.48 9.20 6.31 9.80 14.16 10.82
O&M
expenditure %51.6 58.3 37.4 41.1 58.3 22.5 45.2 67.8 73.3
Favourable Good Moderate Poor
XX XX XX XX
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O&M breakup The major share of the O&M expenditure goes as follows:
0
1020
30
40
50
60
70
80Public Health
0
10
20
30
40
50
60
70
80
General Conservancy O&M
0102030
4050607080
2006/07 2010/2011 2011/2012
Water Works O&M
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Vision for Mehasana
To become financially sovereignthrough innovative ways of municipal
financing
Some options such as
Municipal bond market.
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Municipal Corporations(Amount in Crores of Rupees)
Municipal
Corporation
Issue
Date
Maturity
(Years)
Coupon
(%)
Rating Agency Amount Guarantee
Bangalore 1997 7 13 A-(SO) CRISIL 100 Yes
Ahmedabad 1998 7 14 AA-(SO) CRISIL 100 No
Nashik 1999 7 14.75 AA-(SO) CRISIL 100 No
Ludhaina 1999 10 13.5-14 LAA(SO) ICRA 10 No
Nagpur 2001 7 13.43 LAA-(SO) ICRA 50 No
Madurai 2001 15 12.25 LA+(SO) ICRA 30 NoIndore 2001 7 11.50 - - 10 Yes
Hyderabad 2002 8.5 7 AA+(SO) CRISIL 82.5 No
TNUDF 2001 5 11.85 LAA+(SO) ICRA 106 No
TNUDF
(Pooled)
2002 15 9.2 30 No
Municipal BondsMunicipal bonds are type of revenue bonds, with
fixed interest rate, with or without government
guarantee, maturity 7-15 years, taxable or tax free
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References
Financial and operation Plan for Nadiad city. National municipal accounting Training manual for Elected
representatives and Top management, Ministry for Urban
development-2008.
Analysis of Municipal finances, a cross sectional study.,
Ramakrishna Nallathiga, Centre of Good governance,Hyderabad.
Financing municipal services, Reaching out capital markets,
Om prakash mathur, Sanjukta ray
THANK YOU
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