Financial management and service delivery: a nonparametric analysis for Indian cities
TL;DR: In this article, the authors assess the performance of urban local governments in India taking the physical levels of services provided by them as the outputs and the expenditures on resources to provide these services as the inputss.
Abstract: The main objective of the paper is to assess the performance of urban local governments in India taking the physical levels of services provided by them as the ‘outputs’ and the expenditures on resources to provide these services as ‘inputs’ in an integrated framework and pinpoint some possible sources of mis-utilization of resources. We use nonparametric two-stage data envelopment analysis technique to derive the efficiency scores, with a subsequent analysis of slacks associated with the optimization exercise which quantifies the extent of mis-utilization of resources. The main findings suggest that the city governments can provide the same levels of services by using resources lesser by 27 % of what they currently use. We also find that the extent of unproductive spending and under-provision of services are more pronounced in smaller cities. Mis-utilization of resources in factors like establishment and laborcost is more pronounced as the establishment expenditures and contractual payments in the laborcost component involve more leakages.
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TL;DR: In this article, the authors assess the fiscal health of KMC by estimating the gap between revenue and expenditures over a period of last 10 years and find that the own revenues generated by the KMC are not sufficient to meet its expenditures.
Abstract: We assess the fiscal health of KMC by estimating the gap between revenue and expenditures over a period of last 10 years. It is found that the own revenues generated by the KMC are not sufficient to meet its expenditures. Even when we account for PPP and grants from the government the expenditures exceed the revenue receipts. The revenue receipts have registered a greater fall than the fall in the revenue expenditures. This gap has been filled up by raising loans, which is not a sustainable solution in the long run. While the revenue expenditures on services already fall short of the expenditure norms and comprise of only 45.4 percent of the total revenue expenditure of the KMC, we identify a further burden on it in the form of other major yet unavoidable components like pension funds, electricity charges, and administration and support. We estimate the revenue capacity and estimate the best-case scenario using certain simulation exercises. It was found that if we raise the own revenue to GCP to 2 percent, the KMC is unable to meet the revenue expenditures. However, when we push the own revenue to GCP ratio further to 4 percent, to equate it to revenue expenditure to GCP ratio, the KMC is comfortably able to meet all its revenue expenditures. When we compare the own revenue to revenue expenditure on all the services (that is water supply, sewerage and drainage, streetlights, roads and solid waste management), we estimate that the desired own revenue to GCP ratio is 1.72 percent. The ratio is almost the same, 1.7 percent of the GCP, when we consider expenditure needs on all the services. In conclusion, we suggest to either tap better the existing revenue handles like property tax, car parking fees, road charges, etc. or develop new non-tax handles/ user charges like charges from cable operators or mobile towers. At the same time, it is important that KMC diverts most of its expenses towards providing basic services to it populace.
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TL;DR: In this article, the authors attempted a systematic analysis of three corporations in the region: the Indian city of Kolkata (Kolkata Municipal Corporation, KMC) and the city corporations in Bangladesh's capital city, Dhaka (Dhaka North City Corporation, DNCC, and Dhaka South City Corporations, DSCC) based on the incomes and expenditures of these corporations, they attempted for the first time a comparison in the status of finances and service delivery in cities of two South Asian Countries.
Abstract: Fiscal and financial management in South Asian cities typically face constraints in capacity and utilization of resources. This paper attempts a systematic analysis of three corporations in the region: the Indian city of Kolkata (Kolkata Municipal Corporation, KMC) and the city corporations in Bangladesh’s capital city, Dhaka (Dhaka North City Corporation, DNCC, and Dhaka South City Corporation, DSCC). Based on the incomes and expenditures of these corporations, this paper attempts for the first time a comparison in the status of finances and service delivery in cities of two South Asian Countries. The main findings suggest that the revenue receipts of KMC is significantly higher than that of either DNCC or DSCC or even both the bodies combined. This is true for own revenue as well as for grants from the upper tiers. Both DNCC and DSCC have expenses, which are way below the low level of existing earnings. These expenses are less when compared with international expenditure norms also. For KMC the revenue is not sufficient to cover the expenditures. For DNCC and DSCC, levels of expenditures on provision of urban services are abysmally low, which is also reflected in the status of service delivery in these cities. Property tax accounts for the lion’s share of the tax revenue in both Kolkata and Dhaka. For Dhaka, non-tax revenues obtained from fees, fines, rates, etc. have a higher share in own revenue, while Kolkata has higher shares of taxes. Interestingly, despite the low revenue generation capacity of the DNCC and DSCC, this is what comprises the bulk of total revenue. Grants received from the upper tiers are very low in DNCC and DSCC compared to the fact that close to half of KMC’s total revenue comes from grants. We also estimated the GCP for Dhaka and Kolkata and did some simulation exercises for estimating the revenue capacities. Based on these exercises, we suggest that KMC should generate up to 4 percent of their GCP as revenues for the corporation. For Dhaka, 1 percent of GCP as revenues in both DNCC and DSCC are estimated as their potentials.
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TL;DR: A nonlinear (nonconvex) programming model provides a new definition of efficiency for use in evaluating activities of not-for-profit entities participating in public programs and methods for objectively determining weights by reference to the observational data for the multiple outputs and multiple inputs that characterize such programs.
25,433 citations
TL;DR: The CCR ratio form introduced by Charnes, Cooper and Rhodes, as part of their Data Envelopment Analysis approach, comprehends both technical and scale inefficiencies via the optimal value of the ratio form, as obtained directly from the data without requiring a priori specification of weights and/or explicit delineation of assumed functional forms of relations between inputs and outputs as mentioned in this paper.
Abstract: In management contexts, mathematical programming is usually used to evaluate a collection of possible alternative courses of action en route to selecting one which is best. In this capacity, mathematical programming serves as a planning aid to management. Data Envelopment Analysis reverses this role and employs mathematical programming to obtain ex post facto evaluations of the relative efficiency of management accomplishments, however they may have been planned or executed. Mathematical programming is thereby extended for use as a tool for control and evaluation of past accomplishments as well as a tool to aid in planning future activities. The CCR ratio form introduced by Charnes, Cooper and Rhodes, as part of their Data Envelopment Analysis approach, comprehends both technical and scale inefficiencies via the optimal value of the ratio form, as obtained directly from the data without requiring a priori specification of weights and/or explicit delineation of assumed functional forms of relations between inputs and outputs. A separation into technical and scale efficiencies is accomplished by the methods developed in this paper without altering the latter conditions for use of DEA directly on observational data. Technical inefficiencies are identified with failures to achieve best possible output levels and/or usage of excessive amounts of inputs. Methods for identifying and correcting the magnitudes of these inefficiencies, as supplied in prior work, are illustrated. In the present paper, a new separate variable is introduced which makes it possible to determine whether operations were conducted in regions of increasing, constant or decreasing returns to scale in multiple input and multiple output situations. The results are discussed and related not only to classical single output economics but also to more modern versions of economics which are identified with "contestable market theories."
14,941 citations
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01 Jan 1951
TL;DR: In this article, a numerical evaluation of the "dead loss" associated with a non-optimal situation (in the Pareto sense) of an economic system is sought and the intrinsic price systems associated with optimal situations of whose existence a noncalculus proof is given.
Abstract: : A numerical evaluation of the 'dead loss' associated with a nonoptimal situation (in the Pareto sense) of an economic system is sought Use is made of the intrinsic price systems associated with optimal situations of whose existence a noncalculus proof is given A coefficient of resource-utilization yielding measures of the efficiency of the economy is introduced The treatment is based on vector set properties in the commodity space (Author)
2,242 citations
1,371 citations