Arani Town - Municipal

Chapter - 9 Final Report: Arani Municipality
The Municipality borrowings are high at Rs. 226 lacs, and the outgo on
account of interest is very high. The municipality has the capacity of further
borrowings and can resort to further borrowings for new project identified
based on the additional income to be generated and existing income flows.
Around 41% of the property tax assesses have water connections, and has to
improved up to 85%. The population per residential assessment is as per
standard at 5.5 persons.
On the negative side, the municipality is more dependent on Grants income
for meeting its expenditure. The non tax income can be further improved and
the Municipality should look in to ways and means for increasing non tax
income. Therefore the municipality has to look at various mechanisms to
improve its scope of own income to service the additional borrowings in the
coming years.
With more effective management of resources, there is scope for further
enhancing credit worthiness and revenues of the Municipality.
On our review of the past 5 years financials of Arcot Municipality, we find the
following major variations in the various heads of income and expenditure resulting
in disparities in financial results :
The accounts for the year 2006-07 are un-audited and hence many of the heads of
income and expenditure are showing variations in 2006-07.
Income
There has been variations in Devolution Fund income over the years. At present
SFC Devolution Fund is received from the Government under various heads like
Devolution Fund, Reserve Fund, Equalisation Fund and Incentive Fund. While
Devolution Fund is received every year, the receipt of other funds is not uniform.
Arani Municipality has received funds under Equalisation Fund in the year 2005-06
and 2006-07 resulting in increase in income by Rs. 50 ñ 75 lacs.
Year 2001-02 2002-03 2003-04 2004-05 2005-06 2006-07
Devolution Fund 29.76 18.22 55.49 63.90 148.14 145.00
Expenditure
Depreciation has not been provided for the years 2002-03, 2004-05 and 2005-06.
Similarly finance charges have not been provided for the years 2002-03, 2004-05,
2005-06 and 2007-08.
The power charges of Head Water Works for the year 2006-07 is high at Rs. 33.84
lacs and hence the Operating Expenses are high for the year 2006-07.
9.6 KEY FINANCIAL INDICATORS
A set of key financial indicators has been derived using the financial data procured
from the Municipality for the assessment period. These indicators are used to assess
the municipal performance with regards to resource mobilization, fund utilization,
financial performance and collection efficiencies.
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