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This paper provides an overview of the fiscal problems faced by five urban agglomerations in India, namely, Delhi, Hyderabad, Kolkata, Chennai, and Pune. It analyzes the fiscal health of the five urban agglomerations, quantifies their revenue capacities and expenditure needs, and draws policy recommendations on the means to reduce the gaps between revenue raising capacities and expenditure needs. The main findings suggest that, except for five small urban local bodies in Hyderabad, the others are not in a position to cover their expenditure needs by their present revenue collections. All the urban agglomerations have unutilized potential for revenue generation; however, with the exception of Hyderabad, they would fail to cover their expenditure needs even if they realized their revenue potential. Except in Chennai, larger corporations are more constrained than smaller urban local bodies. The paper recommends better utilization of "own revenue" through improved administration of property taxes, implementation of other taxes, and collection of user charges. It recommends that state governments should explore the option of allowing local bodies to piggyback a small proportion on their value-added tax collections. Another way to reduce the fiscal gap would be to earmark a portion of the sales proceeds from land and housing by state governments sold through their development agencies for improvements in urban infrastructure. The paper also recommends that the State Finance Commissions should develop appropriate norms for estimating expenditure needs, based on which transfers from the state to local governments can be decided.

Cities --- Debt Markets --- Expenditure --- Expenditure decisions --- Expenditure needs --- Finance and Financial Sector Development --- Fiscal decentralization --- Fiscal management --- Local governments --- Macroeconomics and Economic Growth --- Policy recommendations --- Public disclosure --- Public finance --- Public Sector Development --- Public Sector Economics and Finance --- Revenue capacity --- Revenue collections --- Revenue raising capacities --- Revenue sources --- State governments --- Structural reforms --- Subnational Economic Development --- Tax --- Tax base --- Tax bases --- Tax collections

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This paper surveys methodological issues in subnational credit ratings and highlights key challenges for developing countries. Subnational borrowing from capital markets has been on the rise owing to fiscal decentralization and demand for infrastructure investments. A prerequisite for accessing capital markets, subnational credit ratings have also emerged as a part of broader reform for fiscal sustainability. They facilitate a more transparent budgetary and financial management system. The global financial crisis makes subnational credit ratings more relevant, as they contribute to fiscal risk evaluations and fiscal adjustment. In addition to subnationals' own credit strength, the creditworthiness of the sovereign and the intergovernmental fiscal system are among the most critical rating criteria. Implicit and contingent liabilities are integral to the rating process. Indirect debt instruments including off-balance-sheet financing create fiscal risks. The ongoing financial crisis has reinforced the rating focus on the management of liquidity, debt structure, and off-balance-sheet liabilities.

Access to Finance --- Bankruptcy and Resolution of Financial Distress --- Banks and Banking Reform --- Central government --- Cities --- Debt financing --- Debt Markets --- Districts --- Emerging Markets --- Finance and Financial Sector Development --- Fiscal adjustment --- Fiscal decentralization --- Fiscal discipline --- Fiscal sustainability --- Local governments --- Ministry of finance --- Municipality --- Private Sector Development --- Public disclosure --- Public entities --- Public investment --- Public Sector Economics and Finance --- Subnational --- Subnational debt --- Subnational Economic Development --- Subnational entities --- Subnational finance --- Subnational governments --- Towns