International Journal on Science and Technology

E-ISSN: 2229-7677     Impact Factor: 9.88

A Widely Indexed Open Access Peer Reviewed Multidisciplinary Bi-monthly Scholarly International Journal

Call for Paper Volume 16 Issue 3 July-September 2025 Submit your research before last 3 days of September to publish your research paper in the issue of July-September.

The Informal Economy and Municipal Revenue: A Hidden Fiscal Resource for Indian Urban Local Bodies?

Author(s) Dr. MUSTHAF MUSTHAF MUSTHAF
Country India
Abstract Urban local bodies across India struggle to mobilize adequate revenues despite the informal sector's significant economic contribution, employing 80% of the workforce while contributing minimally to municipal coffers. This research examines how Indian cities can better harness this untapped fiscal resource through an integrated analysis of municipal finance data and urban case studies. The investigation reveals systemic obstacles including outdated property tax systems, complex licensing procedures, excessive transfer dependency, and political interference that collectively constrain revenue potential. Findings demonstrate that strategic interventions - particularly digital governance tools, streamlined regulations, and incentive-based fiscal policies - can dramatically improve collection efficiency while safeguarding vulnerable informal workers. Evidence from pioneering cities highlights successful approaches such as GIS-based property mapping, single-window licensing systems, and performance-linked transfers that have boosted revenues by 20-25%. The study develops a comprehensive policy framework that balances revenue generation with inclusive development, offering scalable solutions for municipal finance reform. These insights provide valuable guidance for urban governance in developing economies facing similar challenges of informality and fiscal decentralization.
Keywords Consumer confidence, inflation expectations, employment formalization, financial inclusion, urban India,
Published In Volume 16, Issue 3, July-September 2025
Published On 2025-07-30
DOI https://doi.org/10.71097/IJSAT.v16.i3.7374
Short DOI https://doi.org/g9vzfc

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