As Odisha prepares for a significant urban transition — urbanisation rate estimated to increase to 40% by 2036 and 60% by 2047 — the capacity of its cities to finance and deliver infrastructure and services will become increasingly critical. Urban Local Governments (ULGs) are central to this transformation, yet municipal finances in the state remain constrained by limited own-source revenues, fragmented funding streams, weak expenditure planning, and gaps in accountability systems. Strengthening the financial governance of cities will therefore be essential to Odisha’s broader urban development ambitions.
Commissioned to support the Sixth State Finance Commission (SFC), the Municipal Finance Blueprint for Odisha provides an evidence-based assessment of municipal finances in the state and sets out a reform agenda to strengthen fiscal sustainability, efficiency, and accountability in ULGs. The report recommends redesigning the SFC transfer architecture to improve the adequacy, predictability, and differentiation of transfers across ULG typologies; strengthening own-source revenues through lifecycle-based revenue governance reforms; building long-term, needs-based expenditure planning frameworks; and digitising works and financial management processes to improve fund utilisation and transparency. It also proposes reforms to strengthen accounting, auditing, public disclosure, and participatory governance to deepen accountability in municipal financial management.
The report draws on Janaagraha’s work of strengthening municipal finances in Odisha over the past six years, analysis of audited financial statements of Odisha’s ULGs available on CityFinance.in, inter-state comparative assessments, field visits and consultations with city and state officials, and a review of legislative, institutional, and digital systems governing municipal finance in the state. Together, these insights inform a systems-based framework for strengthening municipal financial governance and enabling Odisha’s cities to plan and deliver infrastructure and services more effectively as the state’s urban transition accelerates.
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