By Vishnu Prasad, IFMR Finance Foundation
As a part of our series on Municipal Finance, we present a summary of Anand Sahasranaman’s paper on Pragmatic Municipal Finance Reforms in India, published in the November 2012 edition of Environment and Urbanisation Asia. The paper draws out the lessons that the South African and Brazilian experiences in property tax reform, institutional reform for effective service delivery, market making institutions for municipal debt and participatory budgeting hold for India. A working paper version may be accessed here.
South African Policy and relevance for India
In South Africa, the Municipal Systems Act (2000) requires each local government to prepare a holistic development plan, which is a long term (8-10 year) plan for provision of social and infrastructure services to the municipality. Financial planning forms a critical part of this plan as the municipality’s proposed infrastructure program must be supported by a sustainable financing structure. The Act also envisages the participation of the community as an equal partner in local government by requiring participatory and transparent budget practices, participatory decision making in pursuing municipal service partnerships and a public process of policy development in setting municipal tax rates and tariffs. In this section, we look at relevant features of South African policy.
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