Abstract
Local bodies in India have limited self-generated sources of revenue and very low fiscal clout. The implications of these for the federal structure of governance cannot be ignored. This chapter presents a review of the fiscal frame of local bodies in India. It presents the progress they have made in achieving fiscal solvency through engagement in the fiscal reform process. The discussion begins with an overall fiscal scenario of local bodies in India and the nature and magnitude of intergovernmental grants. While outlining the reforms of various fiscal instruments, it presents an elaborate discussion of property tax reform, which is the main source of revenue of the local bodies. This chapter also deals with substitutes of the octroi and other possible sources of revenue.
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Notes
- 1.
One of the most important events in the history of property tax took place on 7 June 1978 when the Jarvis-Gann Amendment to the Constitution of the State of California was passed owing to severe public demand for tax limitation. It restricted the property tax rate to no more than one per cent of assessed value with other constraints put on rate revisions. Many other cities in USA also witnessed such revolt subsequently and had to incorporate such tax limitation (see O’Sullivan, Sexton and Sheffrin, 1994 and 1995; Preston and Ichniowski, 1991).
- 2.
This version was changed in 2015 by MCGM.
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Rath, A. (2018). Fiscal Reforms at the Local Level in India: An Overview. In: Sekher, M., Parasuraman, S., Kattumuri, R. (eds) Governance and Governed. Springer, Singapore. https://doi.org/10.1007/978-981-10-5963-6_6
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