Praja Foundation released the “Fiscal Empowerment of City Governments 2026” report at a national consultation in Mumbai. The study analysed 398 budget documents from 2017-18 to 2025-26. It is the organisation’s third such report on municipal finance.

A study of 43 municipal corporations across 28 States and two Union Territories has found that cities in India depend on government grants for nearly 60% of their income. Own source revenue accounts for an average of 34.95% of total municipal income, while property tax contributes only 14.46%, lower than non-tax revenue’s share of 17.16%.

The average share of tax revenue in total municipal income for the 43 cities stood at 17.97%. Per capita own-source revenue was ₹2,664.69. Only 14 of the 43 cities published all nine budget documents on their website or in the public domain for the period under review.

Budget data as per account heads was published by 25 cities, while 14 cities issued budget data divided by department accounts. Twenty-five cities followed the format of accounting prescribed in the National Municipal Accounting Manual (NMAM) 2004. The remaining 18 cities used their own municipal code.

Twenty-three of the 43 cities do not have an independent authority to introduce new taxes from the list assigned under their respective State Municipal Acts. Nineteen cities lack independent authority to approve their budget as per the relevant Municipal Acts.

All 43 cities are permitted to borrow under their State Acts. However, only 20 of them borrowed funds between 2016-17 and 2023-24. The average borrowing share of all cities except Mumbai during this period was 3% of total income, indicating a low level of borrowing among municipal corporations.

Nitai Mehta, Founder and Managing Trustee of Praja Foundation, said decisions made at the city level directly affect citizens, as cities are closest to the people. He added that better control over funds, diverse methods to raise own-source revenue, third-party performance audits, and service delivery based on Service Level Benchmarks are attributes for effective municipal governance.

Ravikant Joshi, an urban finance specialist, noted that while municipal own source revenue has kept pace with nominal GDP growth, cities remain dependent on grants. He said operational surpluses are thin, capital expenditure relies largely on grants, and revenue growth is slowing in medium and large cities.

V.N. Alok, Professor of Public Finance at the Indian Institute of Public Administration, said stronger financial support, improved governance frameworks, and better planning can help enhance urban infrastructure and service delivery.

Milind Mhaske, CEO of Praja Foundation, said urban governance is a State subject under the Constitution, leading to variance in how cities are empowered and managed. He said the authority to introduce and revise tax rates should rest with city governments for them to function as units of self-government.

The report is based on data from 43 cities across 28 States and two Union Territories. A QR code provided by Praja offers access to the press release, event photos, and other documents.