New Delhi: With rapid urbanisation posing tremendous challenges in delivery of services, the Economic Survey on Tuesday suggested that municipalities should tap the potential of “property tax” to generate additional revenues at the city level.
The survey found through a study that Bengaluru and Jaipur are currently collecting no more than 5-20 per cent of their respective potential for property tax. It suggested that “satellite imagery” should be used for improving urban governance by facilitating better property tax compliance.
“Urbanisation will pose considerable challenges for municipalities over the coming decades. But these challenges can be indeed, must be overcome,” the survey said.
Stating that urbanisation would define the trajectory of Indian development, the report said exodus of rural population into cities over the coming decades would pose tremendous challenges for government, particularly the municipalities, who would be primarily responsible for providing the services that the new migrants and established residents need.
“Success in overcoming these challenges will be vital if the nation is to seize the opportunities that migration to the centres of economic activity can create,” it added.
Noting that primary responsibility for development of urban areas lies with states, municipal corporations, municipalities and nagar panchayats (urban local bodies or ULBs), the survey said: “These levels of government face major and inextricably linked problems — poor governance capacities, large infrastructure deficits and inadequate finances.”
“If better service delivery requires more resources, where can they be found? Perhaps the greatest immediate scope for revenue comes from the property tax,” it added.
Pitching for empowering ULBs financially, the survey said that analysis showed that municipalities that have generated more resources have been able to deliver more basic services.
