Though solid waste management and municipal finances may not sound too exciting, they have created quite a buzz. Last September, credit rating firm Crisil instituted an award for 'Excellence in Municipal Initiatives'. It invited entries in areas like financial management, internal systems, and e-governance. Crisil received a whopping 90 entries from across the country. "There are so many examples of urban local bodies that have transformed themselves, even when larger infrastructure providers elsewhere in the same state have been struggling," says Ravi Mohan, managing director, Crisil. After that, the Indian chapter of the City Managers' Association released a best practice catalogue, featuring things like financial management and private sector participation. Why are municipal initiatives being put on a pedestal? Perhaps because running a city is a complicated business. Municipalities are breaking up governance into pieces, cleaning it up bit by bit, and putting it together to build a complex city structure. Nagpur has regularised almost 22,000 illegal water connections within four months by involving private plumbers. Tirupur has worked out a public-private partnership to supply water to textile industries. The Ahmedabad municipality has de-linked property tax from the Rent Control Act. This is about the water we drink, the taxes we pay, and the quality of service we get in return. An army of municipal commissioners is fighting battles. And winning. Small cities have shown as much gumption as the bigger ones." It is easier to get one's arms around a small town," says Sameer Vyas, managing director, NewTimpur Area Development Corporation. But many municipal officers have just one question: the ideas and success stories are great, but where do we get the money? True enough, the programmes that the cash-strapped municipalities are picking up are not capital intensive. This is an issue that needs to be confronted sooner or later. With declining tax revenues, unstable employment conditions and archaic laws, local governments are increasingly threatened with inconsistent sources of revenue. Loans bring with them their own flavour of headaches, and obtaining international funding is a skill that many local government officers are untrained for. Many cities today are almost bankrupt. They need to figure out ways to come up with money, fast. The backdrop to this is the 74th Amendment to the Constitution that was passed in 1992, giving additional powers to municipalities for urban planning, regulation of land use, construction of buildings, and planning for economic and social development. But existing municipal laws are inadequate for them to carry out their new responsibilities, which includes resource and financial management too. So municipalities are getting innovative. They are tapping the capital markets to raise funds, floating tax free bonds and levying new taxes. For instance, Delhi's shift to the unit rate of taxing will add Rs 300 crore to its coffers, nearly a third more than its current collection. And if companies can announce their quarterly results, then why can't government bodies? Ramesh Ramanathan thought about this when he was managing director of derivatives marketing at Citibank. He dropped out of the corporate world, moved back to Bangalore and put his financial knowledge to good use. Ramanathan, along with additional commissioner of Bangalore municipality RK. Shrihari, worked out a fund based accounting system (F-Bas) that could generate a balance sheet for the corporation. In May 2003, Bangalore became the first city in the country to publish its balance sheet. The F-Bas is basically a sophisticated double-entry accounting system with accurate user cost, assets and liability tracking, and much more. The accounting method was scrutinised by auditors from KPMG and PwC and has been accepted by other agencies such as die State Accounts Department, Comptroller and Auditor General, World Bank, ICAI and USA1D. Drawing up a balance sheet helps the municipality figure out exactly where its assets lie, what state they are in, and where resources have to be diverted. The balance sheet also helps spot the emerging areas of revenue and expenditure