The city of Kolkata is one of the wealthiest and most successful cities in India. The Kolkata Municipal Corporation has been making steady progress in improving the city’s financial management over the past decade, which resulted in the city achieving an A+ rating from CRISIL (reaffirmed in December 2015), India's leading ratings agencyxii. The city has been able to maintain this rating since 2005, providing it with the ability to issue bonds. This has been largely due to the city’s commitment to continuous improvements in its financial management systems, including more efficient revenue collection systems and greater use of revenue- generating mechanisms. In particular, the city has been implementing measures to more effectively manage expenditure and improve the ratio of revenue to expenditure. Individual measures may be relatively minor in scale and impact, but cumulatively have had a significant effect on improving the city’s creditworthiness.
They city has consistently and steadily managed to improve both its revenue collection and expenditure through the introduction of financial management best practices. As a result, the city has demonstrated itself to be highly creditworthy, attracting significant external investment. This includes a USD 300 million support for the Environmental Improvement Investment Program, provided by the Asian Development Bank.
Reasons for success
The slow but steady improvements in the city’s financial situation have been the result of significant and committed investment in building the expertise and capacity of staff. As the city has continued to make improvements, investment and funding to the city have increased, creating a positive cycle of improvements.
When/why a city might apply an approach like this
Low capacity and expertise are a common problem for many cities in both developed and developing countries. Investment in staff yields reliable results through general improvements across the city’s financial management practices.
C40 Good Practice Guides
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- Key Impact
- Achieved investment grade (local) credit rating and strong financial performance
- Financial Savings
- Consistently increased own-source revenues while reducing expenditure year on year since 2005