City Corporate & Business Plan - Municipal

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Chapter ñ 9 Final Report: Ambur Municipality The broad financial analysis of the Ambur Municipality finances reveal that the Municipality has further scope for increasing its own sources of income and collection efficiency for servicing the additional borrowings in the future. To summarise, the overall income pattern of the Ambur Municipality indicates more negative features than positive features. The positive trends are on the income side, where the Municipality has higher growth rate in income than growth in expenditure. But the growth in income is higher mainly on account of growth in Grants income comprising Devolution Fund and Assigned Revenue. The growth in Own Income is only 2% p.a. Besides, the municipality also has very high borrowings at Rs. 331 lacs and is fully leveraged. The municipality can resort to further borrowings for new project identified only based on the additional income to be generated. Around 53% of the property tax assesses have water connections, but it can be further improved up to 85%. The population per residential assessment is high at 7.50 persons, which indicates low coverage. The municipality has therefore enough scope for increasing the property tax assessments. On the negative side, the municipality has a very poor collection performance in respect of property tax, profession tax and water charges and there is enough scope for improvement. The non tax income is also low compared to other heads of income and the Municipality should look in to ways and means for increasing non tax income. Therefore the municipality has to look at various mechanisms to improve its scope of own income to service the additional borrowings in the coming years. With more effective management of resources, there is scope for further enhancing credit worthiness and revenues of the Municipality. On our review of the past 5 years financials of Ambur Municipality, we find the following major variations in the various heads of income and expenditure resulting in disparities in financial results : The accounts for the years 2005-06 and 2006-07 are un-audited and hence many of the income and expenditure are showing variations for these 2 years as given below: - 87 - Voyants Solutions Private Limited
Chapter ñ 9 Final Report: Ambur Municipality Increase in Expenditure The Municipality is incurring a huge sum of money towards hire charge for supply of water. The hire charges for water works out to Rs. 100-150 lacs per annum and the same has been incurred between 2003-04 to 2005-06. The Municipality has also privatized its sanitation services and a sum of around Rs. 20 lacs is incurred towards the same from 2003-04 onwards. Reduction in Expenditure Depreciation and Finance Charges have not been provided for the years 2005-06 & 2006-07. No provision for doubtful collection has been made for the years 2005-06 and 2006-07. Based on past financials, the same works out to around Rs. 30 lacs per annum. 9.6 KEY FINANCIAL INDICATORS A set of key financial indicators has been derived using the financial data procured from the Municipality for the assessment period. These indicators are used to assess the municipal performance with regards to resource mobilization, fund utilization, financial performance and collection efficiencies. 9.6.1 Resource Mobilisation Indicators These indicators summarise the performance of the Municipality with regards sources of funds. Ambur Municipality derives about 50 percent of its revenue income from own sources, while grants account for just about 50 percent of the revenue income. Table 9-25 - Resource Mobilisation Indicators S.No Indicators Value 1 Per Capital Income Rs. 340/- p.a. 2 Share of Own Sources in Total Revenue Income 50% 3 Share of Property Tax in Total Revenue Income 24.84% 4 Share of Revenue Grants & Subsidies in Total Revenue Income 50% 5 Growth in Revenue Income 7.82% 6 Growth of Own Sources of Revenue Income 2.00% 7 Per Capital Own Income Rs. 179/- p.a 9.6.2 Fund Application Indicators These indicators are a measure to ascertain the utilization from the municipal fund. Around 56% of the revenue expenditure is spent on establishment heads, around 36% for municipal assets and services, leaving mere 8% for debt servicing and administration expenses. Establishment expenditure accounts for about 54% of the total revenue generated by the municipality. - 88 - Voyants Solutions Private Limited
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City Corporate & Business Plan - Municipal

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