Study on “Sustainable Financing For Urban Karnataka” – Viable Options

Sustainable Financing for Urban Karnataka - Viable Options presents a comprehensive assessment of the financial sustainability of selected Urban Local Bodies (ULBs) in Karnataka and recommends strategies to strengthen their fiscal capacity and service delivery. The study adopts the 3F framework- Funds, Functions, and Functionaries, to evaluate municipal finances, expenditure needs, staffing, and governance across 12 ULBs. It estimates the capital investment and operation and maintenance (O&M) costs required to achieve national Service Level Benchmarks for water supply, sewerage, solid waste management, roads, and street lighting using HPEC norms, while analysing municipal revenue structures, particularly own-source revenues such as property tax and user charges. Based on financial analysis, citizen surveys, staffing assessments, and reviews of municipal legislation, the report proposes reforms including property tax and guidance value rationalisation, improvements in user-charge collection, adoption of Funded Debt Liability (FDL) as a financing mechanism, strengthening municipal staffing and cadre systems, better alignment of functions with funding responsibilities, and amendments to the Karnataka Municipal Acts to improve fiscal decentralisation. Overall, the report provides a roadmap for enabling financially sustainable, better-governed, and service-oriented urban local bodies in Karnataka.