Enhancing the financial health of Urban Local Bodies by Adoption of technology and AI in Tax System

Abstract

India, the fifth-largest global economy, aims to become a USD 5 trillion economy by 2026 and USD 40 trillion by 2047, driven by targeted reforms and rapid urbanization. Cities, contributing nearly 60% to India’s GDP, require robust urban infrastructure and governance. Gujarat, a prosperous state in western India, has a higher urbanization rate (~48%) than the national average (~36%). This paper examines Gujarat’s urban landscape and the role of Urban Local Bodies (ULBs) in managing socio-economic growth, evaluates municipal finance, and explores how technology can enhance it.

Strong financial health is crucial for cities, which function as autonomous bodies responsible for delivering services like water, drainage, transportation, and green spaces. Cities collect various taxes and charges, such as property tax and water charges. Previously, these were collected manually, causing delays and affecting transparency. The e-Nagar portal, launched by the Government of Gujarat, automates these collections, improving transparency, accountability, and efficiency.

As technology evolves, governments must adopt new systems, particularly those interacting with citizens. Integrating communication channels like WhatsApp and payment gateways like UPI can enhance citizen engagement. AI and ML can improve user interfaces and administrative efficiency through predictive analytics, identifying discrepancies and leakages.

This paper explores AI’s role in enhancing municipal finance, leading to effective service delivery, with e-Nagar as the focus. The research is based on secondary data from the Gujarat Urban Development Mission, a Government of Gujarat agency working under the Urban Development & Urban Housing Department.