With increasing number of people living in cities, urban local bodies in India are under tremendous pressure to manage urban growth. Cities will have to make major investments for supplying growing demand of infrastructure, and hence will require funding for its operations and maintainance. However, most cities in India are facing fiscal stress, and sometimes have limited options to raise revenue. Conventional fiscal tools to raise revenues have several limitations, viz. deficit powers to raise revenue, lack of inter-governmental transfer of funds,
limitations to possibilities of market led borrowings, etc. This calls for a need to look at alternate financing options with an intention to raise resources for urban development. Land is not only one of the fundamental assets that is owned and managed by urban local bodies. Also, large part of land in cities is also under private ownership. Hence, city governments employ variety of land based fiscal tools and practices for generating financial resources. Infact, LBFTs are key sources of financing urban development. However, the potential of these LBFTs is often not suitability realized due to improper enabling environment. Land value capture is being argued as a mechanism that may enable local bodies to recover increase in land values due to public investments, which in turn could e used for financing public infrastructure and services. The DRP will focus on understanding the theory of LVC and its benefits to local bodies for augmenting municipal revenues
