MCs need Major Reforms to Enhance Revenue Sources: RBI Report

Current Context: The Reserve Bank of India (RBI) released a report titled "Own Sources of Revenue Generation in Municipal Corporations: Opportunities and Challenges" on November 13, 2024.

• The report highlights the need for comprehensive reforms to boost the revenue sources of Municipal Corporations (MCs) in India.
• Key Highlights:
• Revenue Sources: The report emphasizes the importance of enhancing own revenue sources through tax reforms, rationalization of user charges, and strengthening collection mechanisms to plug leakages.
• Financial Autonomy: MCs heavily rely on transfers and grants from upper tiers of government, which affects their functional and financial autonomy.
• Revenue Growth: The revenue receipts of MCs rose by 20.1% year-on-year to ₹1.7 trillion till March 2024 (FY24). However, the share of own resources in receipts stood at 61.9% (Budget estimates) in FY24, up from 59.7% in FY23.
• Technological Adoption: The report suggests adopting Geographic Information System (GIS) mapping, digital payment systems, dynamic valuation systems, and better monitoring to enhance property tax collections.
• State Finance Commissions (SFCs): The report recommends that SFCs be formed regularly, their reports be tabled in state assemblies, and their recommendations be implemented in a time-bound fashion.

Question:

1 As per the Reserve Bank of India (RBI)’s report titled "Own Sources of Revenue Generation in Municipal Corporations: Opportunities and Challenges" report, what is the share of own resources in the revenue receipts of Municipal Corporations in FY24?

• A) 59.7%
• B) 61.9%
• C) 62.5%
• D) 63.8%

Answer: B) The report mentions that the share of own resources in revenue receipts increased to 61.9% in FY24, compared to 59.7% in FY23, reflecting some improvement in self-reliance.