A roadmap for Mumbai’s governance and fiscal path ahead by Praja Foundation

As Mumbai grapples with pressing governance and fiscal challenges the findings from the National Urban Convention 2024 offer a crucial roadmap for reformThe convention underscored the importance of strengthening the cityrsquos fiscal autonomy improving governance structures and ensuring efficient coordination between planning agencies as the key steps towards securing Mumbairsquos future as a vibrant resilient and financially empowered metropolisOrganised by the Praja Foundation on Friday September 27 the convention saw the release of three key reports Fiscal Empowerment of City Governments Prajas Urban Governance Index 2024 and Spatial Planning Index 2024 by Urban Design Research Institute UDRIThese reports released in collaboration with the National Institute of Urban Affairs NIUA provide insights into the state of governance fiscal health and spatial planning across 43 cities in 28 states and two Union Territories Mumbai Indiarsquos financial capital was a focal point of the reports which spotlighted its unique challenges and called for urgent reforms to boost municipal governance fiscal autonomy and urban planningBy bolstering fiscal autonomy empowering governance structures and fostering better coordination between agencies Mumbai can secure its place as a financially independent wellgoverned city that is prepared to meet future demands experts emphasisedHighlighting the event Milind Mhaske CEO of Praja Foundation took to X formerly Twitter on Saturday afternoon and wrote Engaging in the pursuit of improving urban governance has been a passion for the Prajafoundation team amp I enjoy every moment of it But one initiative stands out for its sheer scale our flagship report Urban Governance Index 2024Engaging in the pursuit of improving urban governance has been a passion for the Prajafoundation team amp I enjoy every moment of it But one initiative stands out for its sheer scale our flagship report Urban Governance Index 2024 httpstcoMExxALgi81 pictwittercom1wBafz0IqYmdash milind mhaske milindmhaske September 28 2024Key points from the three reportsMumbairsquos fiscal struggles Impact of GST and decline in revenue Mumbairsquos fiscal health has faced significant setbacks notably after the implementation of the Goods and Services Tax GST in 2017 which eliminated the Octroi Taxmdashpreviously a major revenue source for the city The loss of this tax has severely impacted the cityrsquos financial autonomy with the following trends outlined in the Fiscal Empowerment Report Ownsource revenue grew at a nominal 69337 CAGR but when adjusted for inflation this growth reduced to just 30937 Mumbairsquos tax revenue saw a sharp decline with a 105837 nominal CAGR and 138037 real CAGR highlighting the struggle to maintain revenue streams postOctroi Despite having a relatively high Per Capita Own Source Revenue of 1780705 the city has become increasingly dependent on state and central government grants indicating a worrying decline in fiscal selfrelianceMoreover the stagnation in property tax growthmdash a crucial revenue source mdash was another red flag Mumbairsquos per capita property tax revenue was reported at 107173 far below other major cities such as Hyderabad 363963 The report found little growth in property tax between 2016 and 2022 calling for urgent reforms in revenue collection methodsGovernance challenges Weak executive power and fragmented planningThe Urban Governance Index painted a lessthanideal picture of Mumbairsquos governance structure The report emphasised the ceremonial role of the cityrsquos mayor whose powers remain limited by state laws The report highlights how the Mumbai Mayor lacks the authority to appoint committee chairpersons undermining their influence over city governance While councillors are salaried the city council does not have the power to pass a noconfidence motion against the mayor limiting checks and balances on executive powerThe governance report also raised concerns over financial autonomy Although Mumbai can raise and revise taxes the city council lacks the authority to approve its own budget mdash a key limitation that hampers fiscal independence Additionally multiple agencies such as the Municipal Corporation of Greater Mumbai MCGM and the Mumbai Metropolitan Region Development Authority MMRDA manage core city functions like sanitation and public health leading to fragmented control and ineffective governanceSpatial Planning Strong framework but coordination neededMumbairsquos spatial planning system however showed promise The UDRI Spatial Planning Index 2024 commended the city for its robust legislative framework which enables regional and zonal planning aligning well with the 74th Constitutional Amendment The cityrsquos development plans are wellmatched to administrative boundaries ensuring smoother governanceYet issues of coordination between multiple planning agencies remain a significant challenge The fragmentation between the MCGM and MMRDA creates inefficiencies in plan implementation The report also pointed out that while Mumbai boasts an inhouse team of planners and has established partnerships with educational institutes onground implementation often lags behind the legislative frameworkRecommendations Reforms for a resilient futureThe three reports collectively call for comprehensive reforms across fiscal and governance structures offering a roadmap for Mumbairsquos future which includes recommendations such as Revenue diversification To reduce dependence on state and central grants the city needs to explore new financing methods and optimise property tax collection Enhanced coordination A more integrated approach between the various planning agencies especially MCGM and MMRDA is essential for smoother governance and more effective implementation of spatial plans Empowering the mayorrsquos office Strengthening the mayorrsquos role with greater executive powers and forming functional committees could lead to more effective city governance Stronger fiscal autonomy Granting the city council the authority to approve budgets would improve fiscal independence and enable more efficient financial management