Our inlet pipe of water supply from municipality is half inch id The water passes through a water meter having half inch connection. If we increase the diameter of the inlet pipe to one inch id and retain the same half inch meter, would it result in more supply of water at the outlet, or would it create a bottle neck
A 1" water meter is a large meter. We have a 5/8" meter for a 2000 sq ft house on a 10 000 sq ft lot. I think this is standard here in Dallas.
It may actually make sense to have a meter which is smaller than the subsequent supply line that goes from the meter to the house. The resistance to flow of a section of pipe is inversely proportional to the cross sectional area but is also directly proportional to the length. So if the supply line is long then it should be larger than the meter or the supply line will be the major resistance. You need to get the details from local plumbers and the city.
Some cities have higher mains pressure than others and so smaller meters would be OK.
In our case the 5/8" meter is at the street and a 3/4" (or 1"?) supply line goes from the meter 30 ft to a set of valves and Tees in a box near the slab foundation. The main line going to the house under the slab is 3/4". This reduces to 1/2" at various Tees.
EDIT I misunderstood the question, but I think I understand it now. You want to know if the city should increase the size of the inlet pipe to the meter if they change to a larger meter, right?
That is a decision for the city. I suppose they have a protocol for that and you would just ask them what they do. Changing the meter or changing the city valve is done all the time, but I doubt that they will change any piping before the valve. I think the city would do what is necessary to have a higher flow rate that a larger meter would allow.
Changing the pipe from 1/2" to 1" while keeping the 1/2" meter connection will be pretty much pointless. The 1/2" restriction will indeed be a bottleneck.
It seems that the tap from the main to the meter is also 1/2" and these days that is quite substandard. Around here, at least, the standard for a residential service is a 1" tap, to a 1" meter box, to a 1" service line into the home.
Check with your local water company and see about getting them to replace the 1/2" service and meter with a 1" service and meter.