The 15th Finance Commission today met the representatives of the Urban Local Bodies(ULBs) of Telangana. The meeting discussed issues like the impact of implementation of GST on ULBs due to issues like subsuming of entertainment tax and compensation to ULBs by State Government, the issue of supply of free water across the state, the functioning of the SPVs set up by the State Government for various projects. The meeting also focused on the issue of the State Finance Commission (SFC-I) - constituted on March 16, 2015 - which is yet to submit its report.

​Basic Information on Telangana ULBs as provided by State:

​i)​ Telangana Municipalities Act, 1965, Telangana Municipal Corporation Act, 1994 & Greater Hyderabad Municipal Corporation Act, 1965 are the Acts providing for self-governance of ULBs.

​ii) 17 functions out of 18 envisaged in the Twelfth Schedule of the Constitution devolved to ULBs.

​iii) Accounts are maintained upto 2017-18 & audited upto 2016-17.

​iv) SFC-I of Telangana constituted on 16.03.2015 is expected to submit its report by 02-01-2020. State has been releasing funds currently as per the recommendations of SFC-III (appointed by erstwhile AP).

​v) Number of local bodies (as on January, 2019) at each level of ULBs is as below:

ULBs	Number of Local Bodies
Municipal Corporations	6
Municipalities	136
Total	142

23 Nagar Panchayats in the State have been upgraded to Municipalities in 2018.

​Revenue Sources of ULB’s as provided by the State:

i) Main source of revenue of ULBs are own taxrevenue (OTR) and non-tax revenue (NTR).

ii) In 2016-17 & 2017-18, own revenues of Municipal Corporations hovered around 65% of total revenue.From 2016-17 to 2017-18, own revenues (to total revenues) of Municipalities jumped from 52% to 65%, and that of Nagar Panchayats from 52% to 68%.

iii) In 2017-18, the share of immovable property tax in total revenue was 38%, 26%, & 29% for Municipal Corporations, Municipalities, & Nagar Panchayat.

​According to the Report of CAG on Local Bodies, 2016-17:

i) The findings of performance audit on Greater Hyderabad Municipal Corporation (GHMC) is as under:

a) GHMC could not ensure compliance with regard to implementation of Building Rules issued by Government. This resulted in proliferation of unauthorised constructions.

b) Establishment of waste to energy plants had not materialized.

c) GHMC failed in protecting water bodies. 17 lakes were not traceable while 9 lakes were fully encroached.

ii) Social Audit yet to be instituted for programmes implemented by Urban Development Department. 

Devolution by FC-XIV to ULBs

Grants	Telangana (Rs. crore)	All States (Rs. crore)	Grants to Telangana as a % of Total Grants
Basic Grant	2711.12	69715.04	3.89%
Performance Grant	677.78	17428.76	3.89%

Local government finance: GST impact and grant devolution reshaping municipal revenue and governance structures. The 15th Finance Commission met Telangana Urban Local Bodies to address the impact of GST on municipal revenues, arrangements for State compensation, composition of own-tax and non-tax revenues including the role of immovable property tax, and grants devolved under prior Finance Commissions. It examined delayed submission of the State Finance Commission report, interim fund releases under earlier recommendations, governance issues including free water supply, SPV performance, and CAG audit findings on building regulation noncompliance, waste-to-energy nonimplementation, and loss of water bodies.