There is finally some improvement happening in India’s urban centres. Seven years after the government launched the Jawaharlal Nehru National Urban Renewal Mission (JNNURM),all the big cities now claim to follow an acceptable accounting norm in their functioning. This is the first step for them to raise funds from the debt markets. A data base compiled from the ministry of urban development shows the first stage of accounting reforms have run their course in 52 of India’s 67 biggest towns.
In the National Capital Region (NCR),however,the reforms have lagged. Faridabad has not migrated to the standard accounting system and Gurgaon does not even figure in the list of cities which was taken up in the first round of development.
But while the cities claim they have brought their accounting systems up to date,gaps remain. As a result even though from the 11th Finance Commission the cities have begun to receive progressively larger funding from the Centre those funds cannot be audited. The same applies to funds received by them through the urban renewal mission.
Cities like Delhi and Mumbai have budgets that are bigger than several public sector corporations. However,none of them are fully accrual based accounting systems. The Comptroller and Auditor General (CAG) has pointed out that while this was a mandatory requirement under the JNNURM only 20 per cent of the urban local bodies are implementing it.
Standardisation of financial statements and accounting practices will lower the costs of evaluating (them) and facilitate comparison of city finances. Regular and timely disclosures of financial statements will help create a city information ecosystem that will be easy to review and aanlysed by stakeholders,it said. But as Arun Maira,member Planning Commission,in charge of steering urban reforms in the country has pointed out these are some of the stepsthat must be carried through before the Centre makes any additional cash available to the cities.
Since the budgets of the towns have been cash based till recently,it was impossible for a citizen to figure out how the money she has paid as rates and cess to these bodies have got spent. The CAG says an accrual based financial reporting shall help the urban local bodies to be clearly accountable by assessing the effectiveness of programmes and levels of services.