Redefining Financial Strength Indicators : Municipal Surplus, Operating Surplus, and EBIDA in AMRUT Cities
Authors
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Rohit Kumar Shrivastav
Assistant Professor, Department of Commerce, Faculty of Commerce and Business, Delhi School of Economics, University of Delhi, Delhi - 110 007
https://orcid.org/0000-0001-7179-3608
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Lovleen Gupta
Professor, Department of Commerce, Hindu College, University of Delhi, Delhi - 110 007
https://orcid.org/0000-0002-3028-6471
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Pankaj Goel
Ph.D. Research Scholar (Corresponding Author), Department of Commerce, Faculty of Commerce and Business, Delhi School of Economics, University of Delhi, Delhi - 110 007
https://orcid.org/0009-0000-2920-3993
DOI:
https://doi.org/10.17010/ijrcm/2026/v13i1/176056Keywords:
municipal surplus (MS), operating surplus (OS), EBIDA, AMRUT cities, municipal finance.JEL Classification Codes : H54, H62, H70, H72, H83, O18
Publishing Chronology: Paper Submission Date : March 10, 2026 ; Paper sent back for Revision : April 15, 2026 ; Paper Acceptance Date : May 10, 2026
Abstract
Purpose : This paper has assessed whether the accounting template proposed by the National Municipal Accounts Manual (NMAM, 2024) displays the financial sustainability and creditworthiness of cities. The paper has been prepared with the objective of identifying whether a layered surplus reporting framework could improve transparency, comparability, and investment readiness for the cities.
Design/Methodology/Approach : The study analyzed the audited financial statements of FY 2023–2024 of five capital cities representing each region covered under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) using three financial variables, i.e., municipal surplus (MS), operating surplus (OS), and earnings before interest, depreciation, and amortization (EBIDA).
Findings : The results showed that MS, as shown by NMAM, presented an overstated picture of municipal financial performance because it included grants, thereby obscuring the actual operational position of cities. OS and earnings before interest, taxes, depreciation, and amortization (EBITDA) provided more reliable and comparable measures of financial sustainability.
Practical Implications : This paper recommended adopting a three-layered reporting framework for the proposed NMAM 2.0, supported by digital financial disclosures, timely audits, and capacity-building initiatives to strengthen municipal financial reporting, improve investor confidence, and enable cities to access the capital market to issue municipal bonds.
Originality/Value : This paper has proposed a corporate-style layered surplus reporting framework that would enhance the assessment of municipal financial sustainability and creditworthiness, improve the bankability of cities, strengthen urban financial management, and facilitate long-term investment in Indian cities.
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