Table Of ContentVanishing Borders of
Urban Local Finance
Global Developments with
Illustrations from Indian
Federation
Shyam Nath · Yeti Nisha Madhoo
Vanishing Borders of Urban Local Finance
“Shyam Nath and Yeti Nisha Madhoo have given scholars of comparative fiscal
federalism a book we have been waiting for. They walk us through the still under-
studied development of Local public finance in India and link its development
to the norms laid down in the now substantial literature about fiscal decentral-
ization in western countries. For experts in the field, this well researched and
well written book is a must for checking your thinking. For younger scholars, it
is a wonderful place to start.”
—Roy W. Bahl, Jr. Regents Professor Emeritus, Georgia State University, USA,
and Professor Extraordinaries, University of Pretoria, South Africa
“This book is a profound, lucid, timely and easily accessible account of issues
related to Urban Local Finance in a rapidly globalising world. It has some very
insightful illustrations from India that makes it even more attractive as India—a
developing country, is experiencing very rapid urbanization and will face many
novel issues in this area in the future. I strongly recommend this book to
students, policymakers and urban planners.”
—Raghbendra Jha, Emeritus Professor of Economics, Australian National
University
·
Shyam Nath Yeti Nisha Madhoo
Vanishing Borders
of Urban Local
Finance
Global Developments with Illustrations from Indian
Federation
Shyam Nath Yeti Nisha Madhoo
Amrita Center for Economics Amrita Center for Economics
and Governance and Governance
Amrita Vishwa Vidyapeetham Amrita Vishwa Vidyapeetham
University University
Kollam, Kerala, India Kollam, Kerala, India
ISBN 978-981-19-5299-9 ISBN 978-981-19-5300-2 (eBook)
https://doi.org/10.1007/978-981-19-5300-2
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
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Dedicated to Her Holiness Mata Amritanandamayi Devi
Chancellor, Amrita Vishwa Vidyapeetham University
Foreword
Decentralized powers over the provision of local public services has
a long tradition, not only in India, but in countries throughout the
world. Those services are then expected to be financed through a combi-
nation of locally mobilized resources and intergovernmental transfers.
While there have always been challenges associated with this combination
of service delivery and resources available, this volume recognizes that
the issues are becoming much more challenging due to multiple forces
generally beyond the control or even influence of local decision-makers.
Globalization of economic activities can profoundly affect the level and
composition of services required at the local level and may also impact
the ability of local governments to mobilize revenues. However, the same
globalization forces can have adverse effects on the environment which
in turn lead to climate change and specific new needs at the local level,
particularly for coastal cities that are also centers of economic activity.
This volume is unique in its recognition of how these twin forces of
economic globalization and climate change are necessitating a broad-
ened perspective on urban local government finance particularly issues
pertaining to intergovernmental fiscal relations. After reviewing the basic
theories underlying local public goods, their financing, and the rudiments
of fiscal federalism, the challenges associated with economic globalization
are acknowledged and documented. Attention is then turned to a variety
of issues related to globalization including (1) how climate change as
well as policies intended to alter those changes have implications for local
vii
viii FOREWORD
governments and their fiscal conditions, (2) how water supply regimes are
affected, and (3) how local governments are influenced by policy initia-
tives of the central and state governments’ efforts to lower atmospheric
pollutions.
One particularly unique analysis herein is consideration of the links
between fiscal decentralization and efforts undertaken by private enter-
prises under the umbrella term “Corporate Social Responsibility (CSR)”.
The CSR activities that private firms undertake to lessen the impacts of
globalization and climate change can interact with decentralized spending
and revenue raising efforts.
The book contains a blend of conceptual, but theoretically based,
arguments along with empirical, quantitative analyses of observed govern-
mental behaviors. Prominent in the latter are analyses of how local
governments in India have responded to their states’ spending policies as
well as the potential for urban local governments to mobilize additional
revenues. While the volume is focused particularly on urban governments
in India, many of the lessons learned, policy implications drawn, and
approaches to empirical analyses are potentially transferable to other coun-
tries. One overriding fact is that urban governments everywhere are or will
soon be facing the same challenges of globalization and climate change.
Larry Schroeder
Professor Emeritus
Department of Public
Administration and International
Affairs, The Maxwell School
of Citizenship & Public Affairs
Syracuse University
Syracuse, USA
Acknowledgments
My foremost and sincere thanks are due to Indian Council of Social
Science research, New Delhi, for funding a two-year Senior Fellowship
to conduct research on the theme Globalization, Climate Change and
Urban Public Finance. The report prepared during the fellowship has
been instrumental in organizing ideas to bring together revised versions
of some of the chapters in a book form.
A tremendous encouragement from the Chancellor of Amrita Univer-
sity, Mata Amritanandamayi Devi, World Renowned Spiritual Saint
speeded up the momentum through her constant support to the research
center at the University.
In this process, our task was facilitated with the encouraging
comments on some chapters by Professor James Alm, Tulane Univer-
sity (New Orleans, Louisiana, USA), Professor Roy W. Bahl, Jr., Georgia
State University (Atlanta, USA), Professor Thomas Sterner, Univer-
sity of Gothenburg (Gothenburg, Sweden), Professor Raghbendra Jha,
Australian National University (Canberra, Australia), and Dr. Gautam
Naresh, formerly Senior Economist at National Institute of Public
Finance & Policy, New Delhi and currently a freelance consultant on local
financial management.
Grateful thanks are due to two anonymous referees appointed by
Palgrave Macmillan who approved the draft proposal and an anonymous
referee as a final reviewer.
ix
x ACKNOWLEDGMENTS
We acknowledge the support of Palgrave, particularly Sandeep Kaur
for her editor’s role and Sharon Janet and Ashwini Elango for screening
and monitoring the publication of this research-oriented output in a book
form.
Shyam Nath
Yeti Nisha Madhoo
Contents
1 Emerging Challenges in Urban Local Finance 1
2 Public Goods Provision and Local Fiscal Domain 29
3 Tenets of Fiscal Federalism and Decentralization 49
4 Economic Globalization and Local Public Finance 67
5 Corporate Social Expenditure and Fiscal
Decentralization: A Novel Framework 103
6 Global Climate Change and Local Fiscal Intervention 133
7 Overlapping Local Water Supply Regimes 177
8 Local Fiscal Effort in Response to State Expenditure:
Some Empirical Evidence 245
9 Environmental Federalism and Atmospheric
Pollution: Efficacy of Local vs State Expenditure 263
10 Local Tax Potential in an Urban Setting 297
11 Shaping Urban Public Finance 337
Index 359
xi
