Panchayat and Municipal Governments in India - Functions and Finances

If we accept the data mechanically, as done by Govind Rao (2001, pp.12-13), all ULBs would be found to incur in 1997-98 an expenditure of over Rs.151308 crore while all PRIs spend about Rs.20931 crore, suggesting that all local bodies spend roughly Rs.172239 crore (which would be more than half the revenue expenditure of the Union Government of India). Based on this database,
M.G. Rao (2001, pp.12-13) wished us to believe that the total expenditure of all governments
put together spent in a sum equivalent to 34.8 percent of the GSDP (GDP?) while revenue
collection and accrual stood at 18.3 percent and 19.8 percent respectively! He also tries to
make us believe that the three levels of the government were spending almost equal amounts
(ibid).

Rao, M. Govind (2001) Fiscal Decentralisation in Indian Federalism, Working Paper 98,
Institute for Social and Economic Change, Bangalore.

Interesting Paper with good amount of information on the topic

URBAN LOCAL BODIES IN INDIA: QUEST FOR MAKING THEM SELF-RELIANT
P.K.CHAUBEY
Indian Institute of Public Administration, New Delhi
Presented in the National Seminar on Municipal Finances to be held on December 29-30,
2003 by the Indian Institute of Public Administration, New Delhi under the auspices of the
Twelfth Finance Commission.
http://fincomindia.nic.in/writereaddata/html_en_files/oldcommission_html/predocs/speech/chaubey_ulb.pdf