Improving municipal financing and governance

The flourishing of decentralised, autonomous and self-reliant local government (LG) bodies, as envisaged in the Constitution of the Republic and relevant laws, has been a long-cherished aspiration of the countrymen. But the reality on the ground appears to be quite different from what was expected. This is evident from their chronic financial-cum-policy dependence on the centre. This has again come to light in a news item published by this newspaper recently. The report shows that the Dhaka North and South City Corporations are set to miss their revenue targets once again this year, thanks to a mismatch between their goals and objective situation. As a consequence, the two city corporations will not succeed in meeting their budgetary requirements during the current fiscal year (FY). The failure is being mainly attributed to non-implementation of holding tax assessments, and inability to complete construction and rehabilitation of markets, but no justifiable ground has been cited for the lapses.

Autonomy and financial self-sufficiency of LG bodies like the city corporations has been a very old issue. This has unfortunately remained unresolved even after 47 years of the country's independence. The local government financing in Bangladesh has three components -- local resources, government grants and project financing. Although local resources should have received top priority in budget formulation, it is very disappointing that they account for barely 33 per cent of the outlays for the two city corporations in Dhaka. Regrettably, even less than 80 per cent of that one-third amount is likely to be realised this year. The proportion of local resources in DCC budgets has continuously gone down over the years, as records show that 63 per cent of their funds came from own revenues even in 2003-04.

It may be pointed out that much of the revenues earned by the government are in fact local revenues. Couldn't some of these, such as land taxes, be transferred to the municipalities in order to improve their financial standings and thereby enable them to provide better services to the citizens? The government has some lofty plans for strengthening LG bodies and their financing during the Seventh Five Year Plan period (2016-20), but little progress has so far been made in implementing those. A Local Government Legal Framework, to cite here an example, was planned by combining nine different acts and a few hundred rules applicable for the LG bodies. It was supposed to cover formation, jurisdiction, taxation, financing, budgeting and accounting of such bodies. But no visible progress has been made in this area until now. The Seventh Five Year Plan also put emphasis on strengthening planning, budgeting capacities, institutionalising citizens' participation, introducing superior administrative and management practices-cum-procedures at the local level. But no improvement in all such areas could be made. Likewise, progress has been minimal in augmenting the revenue collection of the LG bodies through improved municipal financial system and capital budgeting.

The LG bodies can certainly play a crucial role in improving public service delivery at the local level. The necessity for articulation of diverse needs of citizens and location-specific policies that bear fruit in heterogeneous local conditions, makes it imperative that local governments be strengthened all over the country. A comprehensive set of action-plans and policies should therefore be executed in order to improve their financing and governance. Side by side, concerted efforts should be made to enhance transparency and accountability in their functioning, establish indicators and standards for measuring service delivery performance, and broaden the role of oversight institutions for conducting financial and service delivery audits.