CAG pushes for upgraded accounts manual to improve transparency at urban local bodies

New Delhi: Comptroller and Auditor General (CAG) K Sanjay Murthy has underscored the need for an upgraded municipal accounts manual for urban local bodies to bolster their financial accounting system.

Their current accounting system is broadly modelled on the National Municipal Accounts Manual (NMAM), which was drafted in 2004 but its implementation remained patchy.

Emphasizing the urgent need for NMAM 2.0, Murthy said: “Without robust and digital accounting, neither the rising expectations nor the quality of spending can be met with credibility or confidence.”


“Successive central Finance Commissions, beginning with the Twelfth, have emphasised that strong and transparent urban finances are not optional, they are central to India’s growth story,” the supreme audit institution said in a stamen, quoting Murthy.

The National Urban Digital Mission’s UPYOG stack is a key step towards progress, he said. UPYOG is a national platform created for the delivery of municipal services online, among other things.

“But its potential will only be realised if municipal accounting systems keep pace,” Murthy added.

India has almost 5,000 urban local governments hosting about 35% of the country’s population. This is expected to rise to 41% by 2031, according to the UN’s World Urbanisation Prospects.

Urban areas, though home to one-third of the country’s population, contribute over two-thirds of its gross domestic product. This is expected to rise to 75% by 2030.

Murthy said the funding for cities through centrally-sponsored schemes jumped 500% between 2009-10 and 2020-21. The budget of the housing and urban affairs ministry has surged over nine-fold since 2009–10, growing at a compounded annual growth rate of more than 16%. Moreover, new sources of financing in the form of commercial borrowing and municipal bonds are opening up.

The spike in funding has also raised the need for robust financial accounting at the urban local governments level.