- Key Facts
- Board of Governors
- Board of Directors
- Departments and Offices
- Policies and Strategies
- Annual Meetings
- Independent Evaluation
- Public Sector (Sovereign) Financing
- Private Sector (Nonsovereign) Financing
- Funds and Resources
- Asian Development Fund
- Investor Information
- Business Opportunities
- Consulting Services
- ADB-Japan Scholarship Program
- News & Events
- Data & Research
- Industry and Trade
- Information and Communication Technology
- Public Sector Management
- Social Protection
- Capacity Development
- Climate Change
- Environmental Sustainability
- Gender and Development
- Poverty Reduction
- Private Sector Development
- Regional Cooperation and Integration
- Social Development
- Urban Development
- Brunei Darussalam-Indonesia-Malaysia-Philippines East ASEAN Growth Area (BIMP-EAGA)
- Central Asia Regional Economic Cooperation (CAREC)
- Greater Mekong Subregion (GMS)
- Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT)
- South Asia Subregional Economic Cooperation (SASEC)
- European Representative Office
- Japanese Representative Office [日本語]
- North American Representative Office
- Pacific Liaison and Coordination Office
- Pacific Subregional Office
Countries with Operations
- China, People's Republic of [中文]
- Cook Islands
- Kyrgyz Republic
- Lao PDR
- Marshall Islands
- Micronesia, Federated States of
- Papua New Guinea
Rapid Urbanization Pushing Local Government Budgets to the Limit in India
MANILA, PHILIPPINES - Rapid urbanization is placing significant stress on the budgets of India's local governments and more must be done to improve their financial status to enable them to fund infrastructure projects and delivery of essential services.
To address the issue, the Asian Development Bank (ADB) has agreed to a request from the Government of India to support a study to assess the state of India's local government finances and identify key areas for fiscal and financial reform.
The e-Asia and Knowledge Partnership Fund will provide a $500,000 grant to the India Municipal Finance Study. The Fund was set up at ADB in 2006 through a $20 million contribution from the Republic of Korea. The Government will contribute $170,000 to the study.
India is rapidly urbanizing, with the population in urban areas expanding at an annual rate of 2.4%, outpacing the 1.5% nationwide population growth rate. Over the next decade, the urban population in the country is expected to increase by at least 100 million people. The Government estimates that nearly $475 billion will be required to fund infrastructure development for the next 5 years.
"India's local governments are responsible for providing basic infrastructure and services in cities and towns," said Kyeongae Choe, Principal Urban Development Specialist in ADB's South Asia Department. "But these local bodies - particularly small and medium-sized organizations - are plagued by low municipal revenues and poor financial management skills, and therefore they struggle to finance the kind of essential infrastructure that a rapidly growing population needs."
Ms. Choe said the study will identify problems affecting the finances of urban municipalities in four to six selected states, as representative sample cases.
The study will provide an overview of the issues of the local government finance structure, and identify key reform measures in India's rapidly changing urban context. Policy recommendations on short- and long-term action plans and capacity building areas are expected to strengthen India's municipal financing capacities.
The 18-month ADB-supported study is expected to be completed by February 2011. The Department of Economic Affairs in the Ministry of Finance will be the executing agency.