Devolution of ‘funds, functions & functionaries’ key to efficient local governance

A city is developed when its local government is strengthened and plans are introduced and implemented at the local level. AIILSG works in close association with the Government of India, state governments and city municipalities to introduce plans and development work at the ground level. The newly appointed Director General of AIILSG, Dr Jairaj Phatak, IAS (Retd.) has the experience of serving in big cities like Mumbai, which adds to his knowledge in the urban development sector in India. In this special ‘One-on-One’ Series interaction with him, Abhishek Pandey, Editor, Urban Update, gets to know more about his vision for the institute and the role of AIILSG in improving local governance.

Since you have been working in the urban sector for long now, how do you think AIILSG can contribute in strengthening the capacity of urban local bodies (ULBs) and in providing them with knowledge resources and handholding support?

The AIILSG was set up by local bodies in the Bombay Presidency. Quoting Mani Shankar Aiyar, Indian politician and former diplomat, I would like to say that the real devolution of responsibilities in governance can come on the parameters of three Fs- funds, functions and functionaries. Municipal corporations of Maharashtra and Gujarat were undertaking the works for water supply, sewage, urban transport, fire division and town planning along with the traditional municipal works. That was when the local bodies thought of sharing their experiences and learning from each other’s experiences. The thought was to have common courses, training programmes, etc. to groom their municipal staff. This laid the track for the first work of the institute. The institute does the work for centrally sponsored programmes as well. We devise our training programmes after a thorough analysis. The aim is to develop the programmes in a way that the population of urban India can receive its maximum benefit. With growing urban spaces, many urban services of solid and liquid waste management are coming to villages. The role of our institute is to train staff of such Panchayati Raj institutions as well.

How is AIILSG helping the municipalities in governance issues and in devolving the power to elected representatives?

Since AIILSG is the creation of the municipalities itself, it cannot do anything about the role of municipalities or the elected representatives. It is on the state government to decide what to devolve to the municipal corporations or Panchayati Raj. Unlike National Institute of Urban Affairs (NIUA) or the Indian Institute of Public Administration (IIPA), our institute does not delve into the training of officers at the ministerial or secretariat level. It trains the employees of municipal bodies.
Otherwise, I would like to say that how resources or finances are devolved to local bodies by the state depends on how much the states themselves have. I always say devolving fiscal asset to municipalities is like a father giving pocket money to his young son. He will give in proportion to what he has, and how much he devolves is solely his decision.\

Taking a cue from what you said about a father giving money to his young son, don’t you think since urbanisation has been increasing at a rapid pace, it is time for the son to start generating his own money, start generating his financial resources and become self-dependent?

Certainly. For instance, whatever taxes have been entrusted to the ULBs, especially property tax, must be recovered as much as possible. Similarly, reasonable taxes can be imposed by the ULBs. However, often the ULBs are extremely cautious to impose additional taxes thinking of how the public will perceive it. ULBs generating and increasing their sources of income within the parameters decided for them – is the urban reform we need. For example, in Mumbai, the property tax instead of being linked to the rateable value, is linked to the circle rate. This implies that the entire sale transaction in the property industry is recorded, and the exact rate of any property can be figured out so that it is taxed properly.

Sir, talking about the financial resources and income that municipal corporations generate, Mumbai has the biggest budget among the cities in the nation. What do you think Mumbai is doing differently in comparison to other cities?

The property value in Mumbai is the highest in the country. So, naturally property taxes are a function of the property value. Mumbai has been trying to make sure that no property goes unassessed by using techniques like the GIS mapping. Therefore, more revenues and arrears are returned to the ULB. Similarly, Brihanmumbai Municipal Corporation (BMC) has a very large industrial base, and those industries can pay higher property taxes. Moreover, the sheer volume of its budget due to its population is extremely large.

Sir, talking about the financial resources and income that municipal corporations generate, Mumbai has the biggest budget among the cities in the nation. What do you think Mumbai is doing differently in comparison to other cities?

My next question is about how municipal governments deal with their finances. AIILSG will be completing 100 years soon. what is your vision for the institute and the urban local bodies?
Well, the role of AIILSG will vary from state to state. Because, in some states, there is more devolution of powers to the municipal bodies. As far as municipalities and their income is concerned, it varies too. For instance, in 2017, out of the total amount devolved to municipal bodies in India, Maharashtra and Gujarat received 60 per cent. Naturally, the role of our institute will differ. In cities where corporations do not receive enough budget and therefore need grants now and then, AIILSG will play the role of assisting those corporations in taking up and completing new projects. Meanwhile, in the case of resourceful corporations, AIILSG will play a crucial role in handholding them in using those resources and finances efficiently.

In the last 6-7 years, the Government of India has introduced many urban missions What are the key priority areas where you want the institute to work?

The priority of our institute is to use the externally available fund at its best. The second priority will be the centrally sponsored programmes. I would also like to see our conventional training courses turn focus on changing practical modern needs.

The pandemic has affected cities badly around the globe. Along with pandemic, a lot of additional issues, cities are handling like issues of climate change, sdgs etc. How do you think AILSG can empower and support our cities in that area?

As I’ve said before, whatever is to be devolved on the cities will be decided by the respective state governments. The institute, therefore, will work to help municipal corporations utilise the funds most effectively and efficiently and train their employees to work better for the programmes and agendas. Amongst the SDGs, soon, good quality water is expected to become a big challenge for the nation and its cities. Similarly, air pollution has already reached dangerous levels in many cities in India. Air pollution and resultant diseases will be another prominent challenge for the ULBs in India.

There is an emerging movement of cities coming together in the form of organisations like Resilience for Cities. Do you think AIILSG has a similar role in India? Role of linking together of all cities across the nation for knowledge sharing and capacity building, with events like South Asian Mayor’s Forum, South Asian Cities Summit, Urban dialogue, etc. Do you think these methods can help in empowering cities?

Yes, certainly. AIILSG plays a big role in transmiting ideas and knowledge to different cities along with unique training programmes but the ultimate decision lies with the corporation as to what inspires them the most. It depends on the willingness of each municipal body. For example, the shift from rateable value to capital value in BMC was replicated by Kolhapur.
Thank you so much Sir for sharing this space with us and for telling us how cities can learn from good practices of each other. AIILSG will always be available to assist them by capacity building of the their personnel and in implementing various programmes.