URBAN LOCAL BODIES IN INDIA: FINANCIAL CONTROL FOR BETTER FINANCIAL PERFORMANCE

Sidhakam Bhattacharyya and Gautam Bandyopadhyay ()
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Gautam Bandyopadhyay: National Institute of Technology, Durgapur, West Bengal, India

Theoretical and Empirical Researches in Urban Management, 2012, vol. 7, issue 3, 24-37

Abstract: There is a constitutional imbalance between the functions and finances of Urban Local Bodies (ULBs) in India and most of these are grossly dependent on transfer of funds from upper tiers government. Financial performance of small and medium-sized ULBs is not satisfactory as there is inadequate transfer of fund from upper tiers of governments and inability on the part of ULBs to put their best efforts for mobilizing existing source of own revenues. In such a situation there should be an effective expenditure management system for better financial performance. Effective expenditure management begins with budgetary control system but budgets in Indian ULBs cannot be effectively used for this purpose. Therefore the authors suggest for exercising their recommended financial controls which help the ULBs to increase recurrent surplus or decrease recurrent deficit. Increase in recurrent surplus does not necessarily mean increase in percentage of recurrent surplus. The authors think that financial controls should be exercised as a management control process over the years and this will help the ULBs to increase the percentage of recurrent surplus or to decrease the percentage of recurrent deficit. They have established their views statistically through a case study applying regression methodology on population data collected from secondary source. They have used dummy dichotomous independent variables for presence or absence of financial controls along with other variables. The study ends with validation of the model using RMSE (Root Mean Square Error).

Keywords: Urban Local Bodies; Financial Performance; Financial Control; Regression Analysis; Dummy Dichotomous Variable. (search for similar items in EconPapers)
Date: 2012
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