The Municipal Corporation Ludhiana

The Municipal Corporation of Ludhiana

Ludhiana Municipal Corporation is the biggest in the state of Punjab. The municipal limits cover on area of 169.37 sq. km, which had been divided into four zones. According to estimates Ludhiana has a population of approximately 1.8 million. The fast role of population growth in the city has been accompanied by corresponding demand for infrastructure resulting in serious short fall in essential service like water supply sewerage, sanitations and roads. The biggest challenge before MCL is to provide these core services to the public’s satisfaction in the constraints on limited store transfers. To meet this challenge, it was necessary to go I no r resource mobilation in big way. These efforts have led to a quantum jump in the corporation’s revenue. Dhuri THE year 1997-98 the percentage increase in the income over the preceding year was 2% where as the figure become 37.10% in the year 1999-2000. The tremendous efforts in term of organizational and financial reforms, not only augmented internal revenues but also created a platform to mobilize resources from the open market.

With in four years from 1995-96 to 1999-2000 the internal revenue of the corporation has i8ncreased from Rs. 85 crore to Rs. 166crore on increase of 95 %. The major upserge in revenue is from taxes like octroi where the increase in four years of about 200% followed by house tax revenue which increased by 96%. This amplification has enabled the corpo9ration to provide more funds for development works. As against an expenditure of Rs. 33.99 crore in the year 1996-97, Rs. 84.64 crore Was spent in the year 1999-2000 on capital works alone. The MCL also the first corporation in the state to raise funds from the Capital market through Municipal Bonds. Through these bonds the corporation has been able to mobilize Rs. 17.80 crore without State guarantee. It is in the process of raising funds from HUDCO for its Rs. 150 crore sewerage projects.
Another effort towards self sustenceis the concept of privatisation. The corporation has partially privatised some services like sanitation and is exploring means to privatize provisions like street likes street lights. Privatisation in the field of sanitation, Bill distributation etc. is sucess where Corporation is saving approximately Rs. 45 crore annually.

MCL has another reason to proud. It has got a AA (SQ) rating from ICRA, Indicating high safety risk factors being modest production factors being strong and the prospect of timely payment of principal and interests as per terms.

Double Entry Accrual Based Accounting System
Financial reporting in Indian urban local bodies is based on single entry (cash based) system against budgetary outlays. Though these system conform to the local bodies legislative requirements, they fail to show the complete financial performance thus making the authenticity of the recorded data questionable. Realising this the MCL has initiated the necessary financial reforms and engaged Delhi based consulting firm infrastructure professional enterprise along with technical support from FIRE (USAID). These reforms refers to change from single entry cash based accounting system to double entry accrual based accounting system. The reforms have been initiated to procure accurate and complete information on the financial position of the corporation with the help of the consultant, MCL has prepared on accounting manual which provides accounting procedures, charts of accounts and formats for various activities for the corporation. The technical reports has norms for recognising municipal assets and revenue in consideration with national accounting standards and standard accounting practices. Software consultants are being hired to design a package for the new system, which will facilitate not only department wise budgeting but will also ensure adequate financial reporting, disclosures and transparency in governance..

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