The world has seen rapid urbanisation. Cities are engines of growth, and they need resources to invest in own development. Particularly urgent is the need to finance this development—to achieve the Sustainable Development Goals (SDGs), an estimated $3-4 trillion is needed annually (UN Habitat). There are 4,041 towns in India (Census, 2011)—up from 3,799 towns in 2001. This urbanisation is putting pressure on city resources, often limited, to provide basic services to the citizens and to maintain/upgrade existing amenities. A municipal government’s financial health is critical in ensuring provision of basic infrastructure and services for its citizens’ well-being, attracting investment and for the smooth functioning of city affairs. The functions mandated to a municipal government—cleanliness, waste management, sewerage, water, health, education, street lighting, roads, services for slums—have a direct bearing on the well-being of children, especially those residing in slums (reported in 63% of the 4,041 towns). Children (0-18 years) comprise 34% of the total urban population (Census, 2011).

There is a strong linkage between child rights defined through various articles under the UN Convention on the Rights of the Child (UNCRC) and municipal functions (such as birth registration that provides identity to children). The (daily) effective functioning and delivery of services has a significant impact on the day-to-day growth/development cycle of a child.

The UNICEF came out with a set of 44 child-related indicators to measure the progress of every child in the SDG era by 2030, which are integrated across the 17 SDGs. These indicators are categorised into five dimensions of child rights—the right to survive and thrive, to learn, to be protected from violence, to live in a safe and clean environment, and to have an equal opportunity to succeed. The effective management of municipal government and its financial health has a strong bearing on the well-being of children, especially child-related indicators clubbed under five dimensions of child rights as discussed above. Strong municipal finance, which consists of revenue and expenditure in urban areas, is necessary for the development of sustainable smart cities—to counter the negative effects of urbanisation, provide decent livelihood opportunities, invest in technological interventions to strengthen good governance, attract business to harness the existing human capital, while building the resilience of urban-deprived children and their families towards shocks and stress.

Unfortunately, leaving aside a few, most cities are unable to deliver mandated functions due to paucity of resources, especially financial. One of the greatest challenges city leaders face is raising municipal revenues. The municipal government has to make a pragmatic decision while deciding revenue sources (internal and external), which are usually in the form of taxes or fees charged to local residents towards basic goods and services provided by them. The levying of charges and fees becomes all the more critical when a certain proportion of the population is poor and/or living in slums. Usually, a limited provision of goods and services is extended to slums. It has been highlighted in various researches that slum households often end up paying more for water, electricity, waste management than non-slum households who have access to such amenities at their doorstep.

Municipal governments, with effective decentralisation, win taxpayer trust by investing capital towards improvement of basic goods and services, with a judicious combination of regressive and progressive taxes. It will be more effectual if such decisions are taken through a democratic dialogue with local leaders and citizenry.

Lastly, investment in children should be considered as an important aspect under municipal finance (as is the case in many Latin American countries) and those local governments who are initiating, or have initiated this, should be incentivised by the concerned authorities.

Click here for the published piece.