With the increasing share of urban population in Small and Medium(SM)municipalities in India, the efficiency of local fiscal instruments and their sufficiency towards proposed infrastructure investmentshave become an area of deliberation. As projected by High Powered Expert Committee(HPEC) 2011, municipalities in India have to raise their own revenues by almost 200% by 2031 to meet the proposed investments in urban infrastructure and Land-Based Revenues(LBR) are supposed to play an important role in financing.However, the existing research on LBRs in India is found to be mostly for cities with million plus population but not for SM municipalities, which are projected to accommodate nearly 60% absolute increase in urban population in India by 2031. In this respect, this study made an attempt to analyse the current fiscal position of SM municipalities of Andhra Pradesh(AP) with reference to land based revenues and the study determines that land based revenues are independent and not statistically correlated to spatial and fiscal variables. Land based revenues have capacities to finance about 30% of the capital investments but when assessed to the normative levels, the capacity is about 2% of the existing capital investments with low levels of reliability. Overall, it is inferred that in the state of Andhra Pradesh the fiscal conditions of small and medium municipalities are poor as compared to higher order municipalities and have varied but limited capacities in terms of raising revenues in present practices,which are dependent mostly on grants. The study calls for the need to explore land based revenue models to generate financial resources for investments on infrastructure.
Volume 12 | 06-Special Issue
Pages: 369-381
DOI: 10.5373/JARDCS/V12SP6/SP20201042