India’s Municipal Finance System at a Crossroads #IndiaFinance

04:00 PM
to

05:30 pm (is)

The Centre for Social and Economic Progress (CSEP) is delighted to invite you to a seminar titled “India’s Municipal Finance System at a Crossroads” on Friday, May 16, 2025, from 4:00-5:30 PM (IST).

The seminar will feature a presentation by Om Prakash MathurVisiting Senior Fellow, CSEP & Senior Fellow, Global Cities Institute, University of Toronto. The session will be chaired by Arvind PanagariyaChairman, 16th Finance Commission. The presentation will be followed by comments from the discussants Dk srivastavaMember, Advisory Council, 16th Finance Commission & Chief Economist, Ernst & Young and R Kavita RaoDirector, NIPFP. Rakesh mohanPresident Emeritus and Distinguished Fellow, CSEP will give the welcome remarks at the beginning of the seminar.

The seminar will be held at the CSEP Auditorium, 6, Dr Jose P Rizal MargChanakyapuri, New Delhi – 110021. Please note that this is an in-person event only. If you are in Delhi on the day, please join us for the seminar. The event will be available on the CSEP website and YouTube channel upon completion.

Register here to attend

About the event

Article 280(3)(c) is an important Constitutional provision that requires the Finance Commissions (FC) to recommend measures for augmenting the Consolidated Fund of the State to supplement the resources of the municipalities. FCs have made use of this provision to recommend grants-in-aid for municipalities to take on functions that far exceed their statutorily defined responsibilities, undertake systemic reforms, and establish protocols for ensuring compliance with the recommendations. The forthcoming paper India’s Municipal Finance System at a Crossroads: A Role for the 16th Finance Commission by OP Mathur, explores these features of Article 280(3)(c) and takes a close look at the consequential changes in the finances and finance systems of municipalities. The presentation, based on his paper demonstrates that notwithstanding the extensive use of this Article entailing a substantial rise in the grants-in-aid, the size of municipal revenues has stayed at about 1 percent of the GNI; per capita own revenues of municipalities are about 40 percent lower than the average of US$54 for lower-middle income countries, and property taxes at 0.14-0.15% of GNI even lower compared to an average of 0.30% for emerging economies. The country’s municipal system stands constrained by a lackadaisical response of States to a range of suggestions for broad-basing the revenue base of municipalities and by overlapping and contestable jurisdictions. The questions are: what options does the 16th Finance Commission have for addressing the manifold challenges of municipal finance? Would it capitalise on the pathways set by its predecessors or chart a different course, making use of the lessons learned over the long years of engagement, or trim the scope of this Article in favour of granting autonomy for municipalities in the use of grants?

Chair

Arvind Panagariya

Arvind Panagariya is the Chairman, 16th Finance Commission and Professor of Economics and Jagdish Bhagwati Professor of Indian Political Economy at Columbia University since January 2004. From January 2015 to August 2017, he served as the first Vice Chairman of the NITI Aayog, Government of India, in the rank of a Cabinet Minister. During these years, he also served as India’s G20 Sherpa and led the Indian teams that negotiated the G20 Leaders’ Communiqués during the presidencies of Turkey (2015), China (2016) and Germany (2017). He is a former Chief Economist of the Asian Development Bank and was on the faculty of the Department of Economics at the University of Maryland at College Park from 1978 to 2003. During these years, he also worked with the World Bank, IMF, and UNCTAD in various capacities. He holds a PhD degree in Economics from Princeton University and a Master’s in Economics from the University of Rajasthan, Jaipur.

He has authored or edited 20 books. The latest among them are The Nehru-Era Economic History and Thought & Their Lasting Impact (OUP); India’s Trade Policy: The 1990s and Beyond (HarperCollins, India); Free Trade and Prosperity (OUP, USA); and India Unlimited (HarperCollins, India). His book India: The Emerging Giant (2008, OUP, New York) was listed as a top pick of 2008 by The Economist and described as the “definitive book on the Indian economy” by Fareed Zakaria of CNN. The Economist has described his book, Why Growth Matters (with Jagdish Bhagwati) as “a manifesto for policymakers and analysts.” Scientific papers by him have appeared in the top economics journals such as the American Economic Review, Quarterly Journal of Economics, Review of Economic Studies and International Economic Review, while policy papers by him have appeared in Foreign Affairs and Foreign Policy. He writes for various publications including The Times of India, Financial Times, Wall Street Journal and India Today. He was awarded the Padma Bhushan by the Government of India in 2012.

Presenter

Om Prakash Mathur

Om Prakash Mathur is Visiting Senior Fellow, CSEP and Senior Fellow, Global Cities Institute, University of Toronto, Toronto. From 2014-19, he served as a Senior Fellow and Chair, Urban Studies, at the Institute of Social Sciences and held from 1992-2011, the position of IDFC Chair at the National Institute of Public Finance and Policy, New Delhi. From 1984-1992, Om Prakash Mathur was Director, National Institute of Urban Affairs, and a Distinguished Professor from 2011-2014.

Om Prakash Mathur has written extensively on urbanisation, urban governance, and urban finance, and authored several books and a number of papers published in peer-reviewed journals and books. He holds a Master’s degree in Economics from the Delhi School of Economics and has attended graduate courses at the Massachusetts Institute of Technology and Harvard University, Cambridge, USA.

Discussants

Dk srivastava

DK Srivastava is Chief Policy Advisor, EY India, Member, Advisory Council to the Sixteenth Finance Commission, Honorary Professor, MSE, and Distinguished Visiting Professor, Shiv Nadar University. Formerly, he was Director, MSE, Professor, NIPFP, and Professor, Banaras Hindu University. He was Economic Advisor, Tenth, Principal Consultant, Eleventh, Member, Twelfth, and Member, Advisory Council, Fifteenth Finance Commission.

He was Chairman, RBI Working Group on ‘State Fiscal Responsibility Legislations’ and ‘Committee on Fiscal Statistics’, National Statistical Commission. He has received the Tassie Medallion of Adam Smith at St. Andrews, Kautilya Samman, UP and Uttarakhand Economic Association, and J.K. Mehta award for Excellence in Public Finance, Allahabad University.

His books include Federalism and Fiscal Transfers in Indiawith Dr C Rangarajan (Oxford); India’s Contemporary Macroeconomic Themes (Springer); Development and Public Finance: Essays in Honour of Raja J. Chelliah (Sage/Atlantic); Environment and Fiscal Reforms (co-author) (Sage); and India’s Growth Narrative: Performance and Potential (Atlantic).

R Kavita Rao

R Kavita Rao is Director, National Institute of Public Finance and Policy (NIPFP), New Delhi and holds RBI Chair Professorship at the Institute. Prior to being the director, she was a Professor at NIPFP, leading work on tax policy and assessment of its impact.

Her areas of research interest include role of State in developing countries, taxpayers’ perceptions regarding tax compliance, and tax policy design in national & sub-national jurisdictions.

Dr Rao holds a PhD in Economics from the Indian Statistical Institute, Calcutta and a Masters in Economics from Delhi School of Economics, University of Delhi.

Welcome Remarks

Rakesh mohan

Rakesh Mohan is President Emeritus and Distinguished Fellow at CSEP.

Prior to this, he was President and Distinguished Fellow, CSEP from October 2020 till May 2023. In March 2024, he was appointed to serve on the World Bank Group’s Economic Advisory Panel. He has been a part of the Prime Minister’s Economic Advisory Council (EAC-PM) since October 2021.

Prior to joining CSEP, Dr Mohan was Senior Fellow in the Jackson Institute for Global Affairs, Yale University and was also Professor in the Practice of International Economics and Finance at the School of Management at Yale University, 2010-12. He has also served as Distinguished Consulting Professor at Stanford University in 2009. Dr Mohan was also a Distinguished Fellow with Brookings India.

He has been closely associated with the Indian economic reforms process from the late 1980s. He was Executive Director on the Board of the International Monetary Fund, Deputy Governor of the Reserve Bank of India, Secretary, Economic Affairs, and Chief Economic Adviser of the Indian Ministry of Finance, and Economic Adviser in the Ministry of Industry.

He was also Chairman of Government committees that produced the influential reports on infrastructure: The India Infrastructure Report (1996), The Indian Railways Report (2001) and The India Transport Report (2014).

After the North Atlantic Financial Crisis, he co-chaired the G20 Working Group “Enhancing Sound Regulation and Strengthening Transparency” (2009), and the CGFS/BIS Working Group on “Capital Flows and Emerging Market Economies” (2009).

He has authored three books on urban economics and urban development; two on monetary policy: Monetary Policy in a Globalized Economy: A Practitioner’s View (2009), and Growth with Financial Stability: Central Banking in an Emerging Market. His most recent book (edited) is India Transformed: 25 Years of Economic Reforms.

He has a BSc (Eng) from Imperial College of Science and Technology, University of London (1969), a BA from Yale University (1971) and an MA and PhD in economics from Princeton University.

All content reflects the individual views of the speakers. The Centre for Social and Economic Progress (CSEP) does not hold an institutional view on any subject.

Please contact Gurmeet Kaur at [email protected] for general queries and Ayesha Manocha at [email protected] for media queries.