Financial Sustainability

Over the past decade, the Government of India has made a considerable investment in urban infrastructure, with a special emphasis on sanitation, under various national programs. To translate these investments into sustainable service delivery enhancements that can reach the ULB-level, efforts are needed to develop robust mechanisms to manage fiscal resources that can reliably account for expenditures required for quality inclusive Sanitation services and infrastructure.

ULBs in India tend to continue to derive their functional and financial powers from state governments, despite the 74th Constitutional Amendment Act recognizing municipalities as the third sphere of government. There is a paucity of provisions for appropriate fiscal decentralization, due to which ULB governments lack functional autonomy, and may be unable to benefit from the economic growth of their cities, which in turn adversely affects planning and financing for sanitation projects in these cities.

(Figure-1: GOI Funds received by States till September 30, 2019. Source: CPR (Accountability Initiative), 2019)

More than 60 per cent of all releases in Uttarakhand (69 per cent) and Manipur (62 per cent) were for toilet construction. In contrast, releases for toilet construction were less than 30 per cent for Tamil Nadu (26 per cent), Gujarat (24 per cent), Sikkim (23 per cent), Delhi (19 per cent), and Goa (18 per cent).

Utilization of funds has not kept pace with releases. Cumulatively, between October 2014 and 30 September 2019, 2,749 crore or 76 per cent of the funds released by GoI for toilet construction (IHHLs and CTs/PTs) had been utilized. This expenditure amounted to 28 per cent of the total GoI release to states (9,703 crore).

Only 5 states and UTs had received their entire Mission allocations for SWM, including: Andhra Pradesh, Assam, Gujarat, and Tamil Nadu. In contrast, releases were below 50 per cent in 10 states and UTs, including Uttar Pradesh (45 per cent), Kerala (43 per cent), West Bengal (41 per cent), and Uttarakhand (22 per cent).