Enhancing Municipality Urban Local Body Finances through Satellite Imagery

Bengaluru collects at most 24% of its property tax potential and Jaipur about 11%.

The primary source of own revenue for Urban Local Bodies (ULBs) is the Property Tax. Based on assessment of 36 cities, the 13th Financial Commission affirms that by increasing the compliance to even 80-85% the current property tax (4.4k cr) can be increased to as much as 22 k cr. Challenges to the property tax collection include lack of accuracy in enumeration as well as valuation of properties with a city. Collection is also hampered by lack of adequate staff in the revenue department in many ULBs.

Bengaluru

Spanning 784 square km, satellite imagery of Bengaluru indicates near 50% built-up area. The potential property tax is estimated by fixing ward as a common platform for coalescing net built-up area, property tax unit (guidance values) and FSI ratio. There are 198 wards within the BBMP jurisdiction; properties in these wards have been classified in 6 zones based on the streets they are on, which determines the guidance value.

Source: Economic Survey 2017

This classification determines the Unit Area Value (UAV) used for calculation of property tax. An average depreciation of 10 % was assumed in the computation of property tax. The street wise guidance values are clipped by respective wards and the net built-up density is aggregated to the ward boundary. To accurately capture FSI ratio across values establishments we have considered three scenarios (min, max and average value) based on their respective values by the 12 zones. The mix of residential and non-residential properties by ward was applied based on the current ratio of residential to non-residential properties shared by the BBMP.

Source: Economic Survey 2017

Jaipur

We apply the same methodology on Jaipur. The tenth most populous city of India, Jaipur extends to around 484 sq km with 39% built up area. Unlike Bengaluru the guidance values for property tax in Jaipur, are constituted at colony level. Fixing Jaipur wards as a common platform for integrating built-up density and property tax, the 2,534 colonies were mapped to the wards to arrive at a guidance value weightage factor per ward.

Source: Economic Survey 2017