The Economic Survey 2016-17 has advocated higher local taxes on properties as urban local bodies have primary responsibility for the development and service provisioning of cities.

The survey says local bodies face major and inextricably linked problems—large infrastructure deficits, inadequate finances, and poor governance capacities.

The analysis carried out for the survey has found that greater service delivery is correlated with more resources, own revenue, staffing and capital spending per capita. But the analysis indicates no clear relationship between service delivery and governance.

"The study done for the survey shows that property tax potential is large and can be tapped to generate additional revenue at city level. Satellite imagery can be a useful tool for improving urban governance by facilitating better property tax compliance," it says.

The study has shown that Bengaluru and Jaipur are currently collecting no more than 5-20 per cent of their respective potentials for property tax.