Urban bodies must mend financial reporting to access funds: CAG

Concerned over crumbling urban infrastructure, Comptroller and Auditor General Vinod Rai Wednesday said it was vital for local bodies to access funds to tackle the problem and warned that it will remain elusive if financial reporting norms don't improve.

"The challenge posed by the urban infrastructure deficit call for investments of a scale that require immediate attention of all stakeholders," Rai told a seminar here on performance reporting for urban local bodies.

"While recent years have shown considerable improvement in the finances of the states in terms of reduction of debt and deficit, neither they nor the union government can, by themselves, meet the requirements of the urban bodies," he said.

"Therefore access to markets and participation by the private sector appears to be the options that need to be actively examined," Rai said, adding that the market for municipal bonds in India, however, was almost non-existent unlike countries like the US.

According to him, even developing countries like South Africa, Hungary, Russia, and Mexico have relatively well developed municipal bond markets, which are the primary source of financing urban infrastructure in the developed world.

Rai also gave examples and said India's urban population as per the 2011 Census was 377 million and growing. Among the larger states, Maharashtra, Gujarat, Karnataka and Tamil Nadu were substantially urbanized and this was near complete in Delhi, Mizoram and Goa.

"For India to achieve its full potential it is crucial that the hundreds of millions of people that now inhibit towns and cities of India are provided basic services. These services are a prerequisite," he said.

Yet, he added as an example, few cities had satisfactory network of sewerage facilities. "Bangalore, for example is able to treat only 10 percent of the sewage generated, while Hyderabad treats 43 percent," he said.

Similarly, he added, a recent audit suggested that in Sabarmati at Ahmedabad, Yamuna in Delhi and Musi at Hyderabad, the dissolved oxygen levels were at "0" levels, indicating these rivers were so polluted that they just can't support aquatic life.

"In the larger cities, the unbridled rise of automobiles has rendered the air unfit for inhaling and respiratory diseases are steeply rising," he said, adding that all this called for mechanisms that will encourage public-private partnership.