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The local government heavily depends on grants from state governments and has an inadequate share of revenue compared to its functions. A lack of proper urban planning causes issues providing services for populations. The state government exerts excessive control over local bodies and their finances.

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20 views

Document

The local government heavily depends on grants from state governments and has an inadequate share of revenue compared to its functions. A lack of proper urban planning causes issues providing services for populations. The state government exerts excessive control over local bodies and their finances.

Uploaded by

ihthishamsiddiqui456
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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Financial Dependency upon state Government (Problems Faced by Local Finance)

1. Dependence on Intergovernmental Transfers:

The local government heavily depends on the state governments for getting grants-in-aid out of the
consolidated fund of state. Financial stringency has become the biggest hurdle in good governance at
ground level.

2. Acute Share in Revenue:

Generally, the source of income of local bodies is inadequate as compared to their functions. Their chief
sources of income are the varied types of taxes. However, taxes collected by the local bodies are not
sufficient to cover the expenses of the services provided.

3. Unplanned Urbanisation:

In absence of proper planning, the Municipal Services find it difficult to cope with the increasing needs
of the population, both qualitatively and quantitatively. The administrative machinery of local bodies is
insufficient. Judicious use of land is not being made. This leads to urban poverty, unemployment and
ecological degradation.

4. Excessive Control of State Government:

The State Government takes control of the local bodies which are legislative, administrative, judicial and
financial. Any municipal borrowing has to be approved by the state government.

Unlike the Centre and the States, no distinction is made between revenue expenditure and capital
expenditure at the Local Government level.

5. Multiplicity of Agencies:

The municipal bodies have to contribute to the budget to these agencies while having no control over
them. Example: State Transport Corporation, State Electricity Board, Water Supply Department etc.

6. Low level of People’s Participation:

People do not take adequate interest in the functioning of the local government bodies.

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