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    Assessments of Municipal Finances For The City of Mehasana: Finance Group Water Supply and Sanitation Lab. 07-08-2013

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    Swapneel Vaijanapurkar
    The document analyzes the finances of the municipality of Mehasana city from 2000-2012. It summarizes revenue and expenditure trends, efficiency and debt ratios. Key findings show a decline in tax income after abolition of octroi and property tax now contributing 40% of taxes. Capital expenditure is around 35-40% of total expenditure. Operation and maintenance is the largest component of revenue expenditure at around 70%. The document proposes municipal bond financing as an innovative option for Mehasana to become financially self-sufficient.

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    Assessments of Municipal Finances For The City of Mehasana: Finance Group Water Supply and Sanitation Lab. 07-08-2013

    Uploaded by

    Swapneel Vaijanapurkar
    38 views24 pages
    The document analyzes the finances of the municipality of Mehasana city from 2000-2012. It summarizes revenue and expenditure trends, efficiency and debt ratios. Key findings show a decline in tax income after abolition of octroi and property tax now contributing 40% of taxes. Capital expenditure is around 35-40% of total expenditure. Operation and maintenance is the largest component of revenue expenditure at around 70%. The document proposes municipal bond financing as an innovative option for Mehasana to become financially self-sufficient.

    Original Description:

    Analysis of finances of Mahesana Municipality.

    Original Title

    Assessments of Municipal Finances

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    © Attribution Non-Commercial (BY-NC)

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    The document analyzes the finances of the municipality of Mehasana city from 2000-2012. It summarizes revenue and expenditure trends, efficiency and debt ratios. Key findings show a decline in tax income after abolition of octroi and property tax now contributing 40% of taxes. Capital expenditure is around 35-40% of total expenditure. Operation and maintenance is the largest component of revenue expenditure at around 70%. The document proposes municipal bond financing as an innovative option for Mehasana to become financially self-sufficient.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    38 views24 pages

    Assessments of Municipal Finances For The City of Mehasana: Finance Group Water Supply and Sanitation Lab. 07-08-2013

    Uploaded by

    Swapneel Vaijanapurkar
    The document analyzes the finances of the municipality of Mehasana city from 2000-2012. It summarizes revenue and expenditure trends, efficiency and debt ratios. Key findings show a decline in tax income after abolition of octroi and property tax now contributing 40% of taxes. Capital expenditure is around 35-40% of total expenditure. Operation and maintenance is the largest component of revenue expenditure at around 70%. The document proposes municipal bond financing as an innovative option for Mehasana to become financially self-sufficient.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 24

    Assessments of Municipal Finances for the city of Mehasana

    Finance Group Water supply and Sanitation Lab.

    Revenue Capital Income Total Income Income


    Municipal Finance Revenue Capital Total Expenditure Expenditure Expenditure

    Mehsana and other cities (2010)


    1800.0 1600.0 1400.0 1200.0

    Rs.

    1000.0 800.0 600.0 400.0 200.0 0.0

    per capita revenue receipts


    Source: www.pas.org.in

    Per capita revenue expenditure

    Operating Ratio (2010)


    (Revenue Expenditure) % Revenue Receipts
    2.50 2.00 1.50 1.00 0.50 0.00

    Compared to other cities, Mehsana has the lowest O.R, due to a very low revenue expenditure. The amount spend per person is very low in Mehsana.
    Source: www.pas.org.in

    Efficiency Ratios
    Operating

    Revenue Surplus Total Revenue Surplus Debt Serving Capital Ratio

    *Own sources include Tax income from own sources and Assigned sources

    Operating Revenue Surplus


    (Total Revenue Income-Total Revenue Expenditure) % Total Revenue Income
    In crores 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    Revenue Income
    Revenue Expenditure Operating Revenue Surpus(%)

    9.42
    6.78

    7.05
    5.61

    8.90
    5.38

    10.41
    6.48

    12.55
    9.20

    12.00
    6.31

    14.12
    9.80

    27.35
    14.16

    20.82
    10.82

    28.04

    20.51

    39.54

    37.74

    26.67

    47.39

    30.56

    48.21

    48.02

    Favourable

    Good

    Moderate

    Poor

    >50%

    >35%

    >15%

    <15%

    Total Revenue Surplus


    (Total Income-Total Expenditure) %

    Total Income
    In crores 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    Total Income Total Expenditure Revenue Surplus(%)

    10.0 9.9
    1.7

    7.1 8.2
    -15.9

    9.0 7.9
    12.1

    10.8 9.5
    11.6

    13.7 13.8
    -1.2

    12.4 11.2
    9.3

    14.7 17.5
    -19.4

    31.1 23.2
    25.4

    25.1 19.2
    23.5

    Favourable

    Good

    Moderate

    Poor

    >40%

    >25%

    >10%

    <10%

    Debt Serving Capital Ratio


    Debt Serving* % Revenue Income
    In crores
    2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    Debt Serving Revenue Income Debt Serving Credit ratio %

    0.2 9.4 2.5

    0.3 7.1 4.0

    0.1 8.9 1.0

    0.2 10.4 1.6

    0.0 12.6 0.3

    0.2 12.0 1.5

    0.6 14.1 4.1

    0.7 27.3 2.7

    0.0 20.8 0.0

    Includes Principle repayment and Interest Paid On Loans DSCR Should not be Greater than 30%

    COMPOSITION OF EXPENDITURE AND INCOME


    INCOME SPLIT
    RIOST RIOSNT
    5%
    36% 29%

    EXPENDITURE SPLIT
    CI REE REOM REDS CE

    RI

    35% 56%
    2% 33%

    4%

    INCOME: Revenue Income Own Source Tax Own Source-Non tax From grants and Contributions Capital Income

    EXPENDITURE: Revenue Expenditure Establishment Expenditure Operations and Maintanance Debt Serving Capital Expenditure

    Income Ratios
    Share

    of Own sources* in Total Revenue Income Share of Tax Income in Total Revenue Income

    *Own sources include Tax income from own sources and Assigned sources

    Share of Own sources in Total Revenue Income


    Total Income from Own Sources % Total Revenue Income
    In crores Own Source Income Revenue Income Share of own source income to total income 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    8.1 9.4 86.1

    5.8 7.1 82.9

    4.8 8.9 54.0

    6.5 10.4 62.4

    7.6 12.6 60.6

    6.5 12.0 54.5

    8.1 14.1 57.7

    17.3 27.3 63.2

    13.6 20.8 65.3

    Favourable >80%

    Good

    Moderate XX

    Poor XX

    Share of TAX income in Total Revenue Income


    Total Income from TAX % Total Revenue Income
    In crores Tax Income Revenue Income Share of TAX income to total income 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    7.8 9.4 83.2

    5.6 7.1 79.4

    4.6 8.9 52.1

    6.3 10.4 60.3

    7.4 12.6 59.0

    6.2 12.0 51.8

    8.0 14.1 56.4

    15.1 27.3 55.2

    11.7 20.8 56.4

    Favourable XX

    Good XX

    Moderate XX

    Poor XX

    Key Findings
    Share of Income From Tax Sources
    100 90 80 70 60 50 40 30 20 10 0

    Percentage

    Data Missing

    Year

    Key Findings
    Octroi was a important source of tax for the municipality having a significant share till 2001. After the abolishment of Octroi, the share of tax income came down significantly. Property tax is the single most important municipal tax contributing to 40% of tax income.

    Expenditure Ratios
    Capital

    Expenditure Ratio Establishment Expenditure % Operation and Maintenance Expenditure %

    Capital Expenditure Ratio


    Total Capital Expenditure % Total Expenditure
    In crores 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    Capital Expenditure Total Expenditure Capital expenditure ratio

    3.1 9.9 31.3

    2.6 8.2 31.4

    2.5 7.9 31.8

    3.1 9.5 32.1

    4.6 13.8 33.5

    4.9 11.2 43.7

    7.7 17.5 44.1

    8.1 23.2 35.1

    7.7 19.2 40.0

    Favourable >40%

    Good >20%

    Moderate >10%

    Poor <10%

    Establishment Expenditure %
    Establishment Expenditure % Total Revenue Expenditure
    In crores 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    Establishment Expenditure Total Revenue Expenditure Establishment expenditure %

    3.0 6.78

    2.1 5.61

    3.3 5.38

    3.6 6.48

    3.8 9.20

    4.7 6.31

    4.8 9.80

    3.8 14.16

    2.9 10.82

    44.8

    36.7

    60.9

    56.3

    41.3

    74.7

    48.9

    26.9

    26.7

    Favourable XX

    Good XX

    Moderate XX

    Poor XX

    ESTABLISHMENT EXPENDITURE COMPOSITION


    9% 5% 4%

    30%

    42%

    General Administration Other Taxes Refund General Conservancy T.P.Scheme Misc Deposit Others

    4%
    3% 3%

    Operation and Maintenance Expenditure %


    O & M Expenditure % Total Revenue Expenditure
    In crores 2000/ 2001 2001/ 2002 2002/ 2003 2003/ 2004 2004/ 2005 2005/ 2006 2006/ 2007 2010/ 2011 2011/ 2012

    O&M Expenditure Total Revenue Expenditure O&M expenditure %

    3.5 6.78

    3.3 5.61

    2.0 5.38

    2.7 6.48

    5.4 9.20

    1.4 6.31

    4.4 9.80

    9.6 14.16

    7.9 10.82

    51.6

    58.3

    37.4

    41.1

    58.3

    22.5

    45.2

    67.8

    73.3

    Favourable XX

    Good XX

    Moderate XX

    Poor XX

    O&M breakup

    The major share of the O&M expenditure goes as follows:


    Public Health
    80 70 60 50 40 30 20 10 0

    80 70 60 50 40 30 20 10 0

    Water Works O&M

    2006/07

    2010/2011

    2011/2012

    80 70 60 50 40 30 20 10 0

    General Conservancy O&M

    Vision for Mehasana


    To become financially sovereign through innovative ways of municipal financing

    Some options such as Municipal bond market.

    Municipal Bonds
    Municipal bonds are type of revenue bonds, with fixed interest rate, with or without government guarantee, maturity 7-15 years, taxable or tax free
    Municipal Corporations(Amount in Crores of Rupees)
    Municipal Corporation Bangalore Ahmedabad Nashik Ludhaina Nagpur Madurai Indore Hyderabad TNUDF TNUDF (Pooled) Issue Date 1997 1998 1999 1999 2001 2001 2001 2002 2001 2002 Maturity (Years) 7 7 7 10 7 15 7 8.5 5 15 Coupon (%) 13 14 14.75 13.5-14 13.43 12.25 11.50 7 11.85 9.2 Rating A-(SO) AA-(SO) AA-(SO) LAA(SO) LAA-(SO) LA+(SO) AA+(SO) LAA+(SO) Agency CRISIL CRISIL CRISIL ICRA ICRA ICRA CRISIL ICRA Amount 100 100 100 10 50 30 10 82.5 106 30 Guarantee Yes No No No No No Yes No No No

    References

    Financial and operation Plan for Nadiad city. National municipal accounting Training manual for Elected representatives and Top management, Ministry for Urban development-2008. Analysis of Municipal finances, a cross sectional study., Ramakrishna Nallathiga, Centre of Good governance, Hyderabad. Financing municipal services, Reaching out capital markets, Om prakash mathur, Sanjukta ray

    THANK YOU

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