India’s first generation of economic reforms made a significant change in the perception of the role of local self-government bodies in the Indian public governance system. One of the important reforms introduced during this period was the Constitution (Seventy-fourth Amendment) Act, 1992. This reform empowered the urban local bodies in India to function as local self-governments as the third tier of governance. With the view to further strengthen these urban local bodies in their financial management the central government also developed guidelines for moving to a double entry accrual-based accounting system through the introduction of a National Municipal Accounts Manual.
This working paper provides guidance for impl ementing municipal accounting reforms in ADB’s urban projects in India. The objectives of this paper are to highlight the importance of implementing accounting reforms in the urban local bodies, to inform the processes involved in the implementation, and thus to provide the way forward to improve urban local bodies financial status and overall management.