1. City(ULB) Finances & Budget Analysis
Ravikant Joshi
Meeting with Journalists – 19/01/2018
Urban Journalism Academy for World urban forum 9
Organized by
UN Information Centre and UN Habitat
New Delhi, January 2018
Venue: UNDP Office, 55 Lodhi Road, New Delhi

2. The Context
“Throughout the world cities are suffering from an acute crisis that hinders their capacity to develop sound policy and provide much-needed services to their residents: a crisis of accurate, useful information.
- UN HABITAT Report 2006

3. The Context
What city managers and citizens need to make better decisions is clear: increased local capacity for
The collection (Reliable, up-to-date information on a meaningful set of indicators), of urban data
An assessment of urban data and
An application (the means to turn collected information into good policies and urban plans) of urban data.
UN HABITAT Report 2006
Would like to add following –
To bring in Efficiency, Transparency and accountability in municipal finances and budgeting we need increased capacity of urban journalist

4. Introduction
Municipal Finances and Budgets simply does not get reported or even if reported does not get analysed
Municipal Finances and Budgets Need to be analysed neutrally and independently, it need to get reported to all stakeholders through all types of media
Main obstacle in such analysis is incomplete information and capacity or know how to analyse the information and to use it for decision making
One will be required to ask additional information
Which information should be asked ? For what analysis
What analysis to be done and how to draw policy inferences from it

5. Areas of Financial Analysis
What financial resources a ULB has? Increase or decrease over the years? How efficiently resources have been mobilized by the ULB?
What is the share of own source revenue of a ULB against its total receipts and total expenditure
Total amount available for development and actual development expenditure undertaken
Total revenue potential and actual revenue mobilised
Source wise and total revenue and expenditure annual growth and trend over the years
Sector-wise /function-wise expenditure and its % share and changes over a time period,
Area-wise amount allocated, per capita allocation
Fiscal / Total Deficit
Collection efficiency of a ULB

6. Areas of Budgetary Analysis
How budget is organised? Is budget user friendly?
How far budget is realistic? Ratio of projected vs actual Budget figures
Complete actual accounts statement with opening and closing balance to know correctness of actual figures
Budgeted and actual expenditure on poor and other special sections of society.
Amount of spill over work or total works sanctioned against the funds available
Amount of future budget booked in advance

7. Overall financial summary of ABC Urban Local Body (Rs. In Crore)
 Particulars
cagr
Budgeted
Actuals
Revised
(in Rs. Cr)
(in Rs Cr) %
Opening Balance
3.19
11.01
Revenue Income
3196.1
2335.2
3247
2776.5
3633
2962.1
4167.5
4150.0
12.6
Revenue Expenditure
1208.7
1141.9
1345
1295.6
1732.3
1573.6
1989.6
1901.2
17.4
Revenue Surplus/Deficit
1987.5
1193.3
1902.0
1480.9
1900.7
1388.5
2177.9
2248.8
Capital Income
Capital Expenditure
699.5
1230.9
1253.1
2177.8
33.8
Capital Surplus/ Deficit
-699.5
-1902
Closing Balance
0.0 
overall surplus /deficit
493.8
250
135.4
879.2

8. Core objectives of Municipal Financial Management including Budgeting
Resource Management
Resource Allocation
Efficient and effective operations
Fiscal Management
Use of Public Resources
Transparency
Accountability
Reduction in Poverty
Fiduciary Risk Management
Financial Control Framework
Stewardship and Regulatory Compliance
Oversight

9. Core objectives of Municipal Financial Management including Budgeting
1 Resource management
1.1 Fiscal management
Local economic management of fiscal risk to fund municipal services, including financial balances, flows and the level of debt; levels and impact of tax and non-tax revenues;
1.2 Resource allocation
Allocation and re-allocation of resources through the budget process to achieve municipal policies and priorities, the provision of public goods and to foster greater equity
1.3 Efficient & effective operations
Undertaking municipal operations as effectively and efficiently as possible; financial resources are made available, as planned and when required, information is provided to managers to enable them to make optimal decisions and exercise control

10. Core objectives of Municipal Financial Management including Budgeting
2 Use of public resources
2.1
Transparency
Making information available to stakeholders (including the general public) in a format and time that facilitates transparency in municipal financial operations and civil society participation.
2.2
Accountability
Information is available in a format and time that enables municipal officials to be held accountable for their actions. Appropriate explanations are provided for any significant deviations from the agreed budget. Civil society participation is enabled and encouraged.
2.3 Poverty reduction
Poverty reduction is a priority, including achievement of the Millennium Development Goals, whilst complying with the UN Global Compact. Financial capacity building is provided for:
municipal employees
the wider economy
stakeholders including civil society

11. Core objectives of Municipal Financial Management including Budgeting
3 Fiduciary risk management
3.1 Financial control framework
Financial procedures and information enable the management of financial risk at acceptable levels, including internal financial control, measures to minimise fraud or corruption and internal audit
3.2
Stewardship & regulatory compliance
Resources are managed in compliance with all relevant laws, regulations and standards; considerations of ethics, equity and propriety are fulfilled. Appropriate compliance and relationships are maintained with national funding and regulatory bodies
3.3 Oversight
Public oversight mechanisms, especially by independent audit, ombudsman and legislative review process. Timely review of financial resource use and regulatory compliance by the municipal council, civil society and other stakeholders. Significant findings by oversight bodies are promptly made public.

12. The Five Core Indicators
1. The average difference between the budget and actual figures for the main high- level budget headings over the last three years
2. Average total surplus/deficit over the last three years
3. The extent to which the annual audit report is submitted promptly to the municipal council and made public after the end of each financial year
4. The promptness with which the municipality makes its payments
5. The extent to which the municipality’s budget shows planned expenditure on poverty reduction

13. The Twenty Main Indicators
1. The municipality’s ability to deliver its spending plans
2. The extent to which municipal services are provided to the poor
3. The efficiency with which the municipality collects local taxes
4. The predictability of resources which were made available to departmental managers
5. The promptness with which municipal staff are paid each month
6. The promptness with which municipal pays for goods and services received
7. The extent to which the municipality is able to mobilise its own resources

14. The Twenty Main Indicators
8. The level of the municipality’s debt is adequately managed
9. The municipality’s capital investment and maintenance programme is implemented as planned
10. Revenue Deficit ( Also known as operating or Working) Ratio
11. Municipality encourages civil society participation in budget preparation
12. The municipality’s budget is promptly made public before the beginning of the financial year
13. The municipality is open about the awarding of its contracts
14.The municipality makes its annual report public each year

15. The Twenty Main Indicators
15. The municipality provides regular budget outturn reports to the public indicating poverty reducing expenditure
16. The municipality’s system of local taxation is progressive
17. The municipality has a formal risk management process
18. The municipality’s bank statements are regularly reconciled to its accounting records
19. The audit report on the annual financial statements for the last three years did not contain any major adverse findings or irregularities
20. The municipality council holds meetings, open to the public, staff and their trade unions to discuss its proposed budget and receive financial reports

16. Municipal Budgeting Municipal Finance Structure
Receipts Side
Payment Side
Opening balance
Tax Revenue
Non Tax Revenue
Revenue Grants
Capital Receipts
New Loans
Capital Grants
Extra – ordinary
Deposits Received
Advances recovered
Establishment
O & M
Administrative
Loan Interest
Capital Expenditure
Loan Repayment
Extra –ordinary
Deposits Refunded
Advances Given
Closing Balance

17. Municipal Budget - Structural Analysis

18. Municipal Budget - Receipts Analysis
Tax Rev
Non Tax
Rev Grants
Rev Income
own cap rece
New Loans
Cap Grants
Cap Income
Deposits
Funds
Advances
Extra Ordi Rece
Total Receipts 1 2 3
1+2+3 = 4 5 6 7
5+6+7 = 8 9
10` 11
= 12
= 13
Gen Adm
W S
Sewerage
Roads
Public Works
Health
SWM
Streetlight
Fire
Prim Edu

19. Municipal Budget - Expenditure Analysis
Establishme
Maintenance
Loan Interest
RevExpenditure
own cap expenditu
Loan Expend
Cap Grants Exp
Cap Expenditure
Deposits Refund
Funds Expend
Advances Giv
Extra Ordi Expenditur
Total Expenditure 1 2 3
1+2+3=4 5 6 7
5+6+7=8 9
10` 11
=12
4+8+12= 13
Gen Admi WS
Sewerage
Roads
SWM
Streetlight
Pub Work
Health
Prim Edu

20. City Finances & Budget Analysis
Thank You

21. Municipal Budget Analysis XYZ ULB Finances 2002-03
Receipts Side
Expenditure Side
Rs. In Crores
Opening balance
Tax Revenue
N Tax & Others
Revenue Grants
Sub total
Capital Receipts
New Loans
Capital Grants
Extra – ordinary
Total
Establishment
O & M , Other
Loan Interest
Sub- total
Capital Expenditure
Loan Repayment
Extra –ordinary
Closing Balance
Total

22. Municipal Budget Analysis XYZ ULB Finances 2002-03
Rs. In Crores
Amount Available for Development
Revenue Surplus
Capital Receipts
Loan Account
Capital Grants
Total
Extra-ordinary a/c
Reduction in OB
Total
Amount Spent on Development
Capital Expenditure
Thus large part of capital expenditure is achieved by diverting extra-ordinary receipt which is liability
Opening Balance stands reduced
Does not tell quality of capital expenditure

23. Municipal Budget Analysis XYZ ULB Finances 2003-04
Receipts Side
Payments Side
Rs. In Crores
Tax Revenue
N Tax & Others
Revenue Grants
Sub total
Capital Receipts
New Loans
Capital Grants
Extra – ordinary
Total
Op. balance (40.98)
Grand Total (715.06)
Establishment
O & M , Other
Loan Interest
Sub- total
Capital Expenditure
Loan Repayment
Sub-total
Extra –ordinary
Total
Cl. Balance (42.70)
Grand Total(715.06)

24. Municipal Budget Analysis XYZ ULB Finances 2003-04
Rs. In Crores
Amount Available for Development
Revenue Surplus
Capital Receipts
Loan Account
Capital Grants
Total
Extra-ordinary a/c
Total
Amount Spent on Development
Capital Expenditure
Thus large part of capital expenditure is achieved by increase in loan liability
Opening Balance stands increased nominally
Does not tell quality of capital expenditure