CSRC Working Paper 15

Municipal Finance Systems in Conflict Cities: case studies on Ahmedabad and Srinagar, India
Working Paper No : 15 (series 2)
Author(s) : Pritha Venkatachalam
Date : July 2007

This paper seeks to provide a global overview of urban local government finance and then to focus on India in terms of revealing a more qualified understanding of the relationship between conflict and municipal structures and finances. In doing so, it adopts a case-study approach by studying the cities of Ahmedabad and Srinagar in India that have been short-listed from a wider set of cities identified for the Crisis States Programme. The choice of these two cities illustrates the different dimensions of cities in conflict. The two cities are stark in their contrast in terms of the onset, nature, duration and intensity of conflict as well as the ab initio strength of their respective municipal finance frameworks. Ahmedabad has experienced significant communal urban conflict but its municipal structures and finances have remained robust and the state did not collapse. On the other hand, Srinagar is combating prolonged insurgency and has a rudimentary municipal system that is being developed under challenging circumstances.

Whilst highlighting these differences, the paper also attempts to synthesise the relevant findings from the two case studies. Adopting an inductive approach, it aims to identify some of the key issues that confront city finances as a result of conflict and highlight the underlying factors that define the degree of impact, if any. The conclusions and caveats emerging from this study can be tested further in terms of the fiscal structures of other conflict-torn cities being examined in the programme. Towards that end, the paper seeks to develop a framework for the analysis of local government structures and finances, and their character in conflict cities. Based on the inferences that emerge for other cities, the cities may then be appropriately grouped for meaningful comparison and any broader contingent generalisations. It is important to note that cities differ in their local government structures, and may be at varying stages of functional and financial devolution. Hence, the consideration of fiscal structures of other cities and states may offer further interesting inferences compared to the Indian context.