Fiscal Decentralization and Urban Governance: Assessing the Financial Autonomy of Indian Municipalities

Fiscal decentralization is crucial for empowering urban local bodies (ULBs) to deliver efficient public services and promote sustainable urban development, yet many municipalities remain financially dependent on higherlevel transfers due to weak revenue-generation capacities and institutional barriers.This study develops a Municipal Financial Autonomy Index (MFAI) to assess fiscal independence across cities, evaluating ownsource revenue generation, transfer dependency, and tax collection efficiency, and identifies key determinants including economic capacity, state policies, political factors, and digital governance adoption.Findings reveal significant disparities, with larger, economically stronger cities outperforming smaller municipalities, prompting a four-pillar policy framework: performance-based grants, digital tax transformation, GST devolution reforms, and metro partnerships for peer learning.By integrating empirical analysis with global best practices, this research provides actionable strategies to enhance fiscal autonomy, aligning with sustainable urban governance.