Urban Self-Government-Beyond Financial Devolution

Report of the State Finance Commission (Relating to Urban Local Bodies), Government of Karnataka, Bangalore, 1996.
THE relative importance of urban areas in the Indian economy is not well understood by most people. That our cities and towns account for only about 25 per cent of the population is often seen as a justification for the continued neglect of the management of the urban local bodies and their finances. Not many people realise that over two-thirds of our GNP is generated in these areas. The vast majority of our skilled and technical labour force live and work in urban areas. The productivity of the capital and labour in our urban areas is in no small measure dependent on the adequacy and efficiency of the public services available in these areas. Nevertheless, neither the central government nor most of the state governments have paid any attention to this problem and to the reform of urban local bodies and their finances. The 74th Constitutional Amendment has given a sense of urgency to this problem, though many state governments are yet to respond to the challenge. The government of Karnataka is therefore to be commended on the appointment of a Finance Commission (under the chairmanship of G Thimmaiah) with a focus on the finances of urban local bodies in the state. The report of the Commission was recently submitted to the government of Karnataka.