Municipalities

Municipalities, often referred to as urban local bodies, play a pivotal role in shaping the urban landscape of a nation. With the rapid urbanization witnessed globally, understanding the significance of municipalities becomes paramount. In India, municipalities serve as the cornerstone of urban governance, catering to the diverse needs of urban populations across the country.

The establishment of Municipalities or Urban Local Governments received constitutional validation with the enactment of the 74th Constitutional Amendment Act in 1992. These provisions, incorporated in Part IXA of the Constitution, became effective on June 1, 1993, laying down a constitutional framework for local self-government units in urban areas.

Constitutional Provision

Evolution of Urban Local Bodies

The concept of urban local government in modern India traces back to the period of British colonial rule, with significant milestones including:

Establishment of the first municipal corporation in India in Madras in 1687-88.
Formation of municipal corporations in Bombay and Calcutta in 1726.
Lord Mayo’s Resolution of 1870 emphasized financial decentralization and envisioned the growth of local self-government institutions.
Lord Ripon’s Resolution of 1882, hailed as the ‘Magna Carta’ of local self-government, marked a significant step in empowering local governance. Lord Ripon is often referred to as the father of local self-government in India.
Appointment of the Royal Commission on decentralization in 1907, chaired by Hobhouse, which submitted its report in 1909.
Implementation of the dyarchical scheme under the Government of India Act, 1919, wherein local self-government became a transferred subject under the charge of a responsible Indian minister.
Passage of the Cantonments Act in 1924 by the Central legislature.
Declaration of local self-government as a provincial subject under the provincial autonomy scheme introduced by the Government of India Act, 1935.

Historical Background

In 1989, the Rajiv Gandhi administration presented the 65th Constitutional Amendment Bill, also known as the Nagarpalika bill, in the Lok Sabha. The objective was to enhance and restructure municipal bodies by granting them constitutional status. Although the bill was approved by the Lok Sabha, it faced defeat in the Rajya Sabha in October 1989, resulting in its lapse.

Subsequently, the National Front Government led by V P Singh reintroduced a revised version of the Nagarpalika Bill in the Lok Sabha in September 1990. However, the bill did not pass and eventually lapsed due to the dissolution of the Lok Sabha.

In September 1991, P V Narasimha Rao’s Government introduced a modified version of the Municipalities Bill in the Lok Sabha. This bill eventually evolved into the 74th Constitutional Amendment Act of 1992, which became effective on 1 June 1993.

74th Constitutional Amendment

Constitution of Municipalities
The Act outlines the formation of three types of municipalities based on size and area in each state:

Nagar Panchayat (for transitioning rural areas)
Municipal Council (for smaller urban areas)
Municipal Corporation (for larger urban areas)

Composition of Municipalities: Seats are to be filled via direct elections, with each municipal area divided into wards. The state legislature may determine the election process for the municipality’s chairperson and provide representation for various individuals, including those with expertise in municipal administration, elected representatives from other legislative bodies, and committee chairpersons.

Constitution of Wards Committees: Ward Committees are to be formed in municipalities with populations exceeding 3 lakhs.

Reservation of Seats: Reservations are mandated for scheduled castes, scheduled tribes, and women, with at least one-third of seats reserved for women. The state legislature may also reserve seats for backward classes and determine reservation procedures.

Duration of Municipalities: Municipalities have a fixed term of 5 years, with elections to constitute a new municipality required to be completed within 6 months if dissolved prematurely.

Powers and Functions
Municipalities are empowered with necessary powers and responsibilities for self-government, including economic development and social justice planning and scheme implementation. The Twelfth Schedule of the Constitution lists illustrative functions.

Finances of Municipalities: State legislatures determine matters related to taxation, grants-in-aid, and funds for municipalities, specifying taxes, duties, fees, and revenue sharing arrangements.

Finance Commission: A Finance Commission reviews municipalities’ financial positions, making recommendations on tax revenue distribution, grants-in-aid, and measures for financial improvement. The governor presents the commission’s recommendations and action taken reports to the state legislature.

Election Process for Municipalities State Election Commissions are responsible for overseeing electoral roll preparation and conducting all elections for panchayats and municipalities.

Audit and Financial Management: Municipal accounts maintenance and audits will adhere to State laws, allowing flexibility based on local needs and available institutional frameworks.

District Planning Committee Each state is mandated to establish a district planning committee at the district level to consolidate plans from panchayats and municipalities and draft a comprehensive development plan for the district.

Metropolitan Planning Committees Metropolitan areas are required to form metropolitan planning committees to draft development plans.

Continuation of Existing Laws and Municipalities State laws concerning municipalities will remain effective for one year from the enactment of the act. States must transition to the new municipal system within a year of the act’s commencement. Existing municipalities continue until the end of their terms unless dissolved by the state legislature.

Legal Bar on Court Interference The act prohibits judicial interference in municipal electoral matters, including the delimitation of constituencies and seat allotment. Challenges to municipal elections can only be raised through election petitions as per state legislative provisions.

Structure of Urban Local Bodies

Municipal Corporation: Typically found in major cities like Bangalore, Delhi, Mumbai, and Kolkata.

Municipality: Commonly established in smaller cities and referred to by various names like municipal council, municipal committee, or municipal board.

Notified Area Committee: Created for rapidly developing or underserved towns, with all members nominated by the state government.

Town Area Committee: Found in smaller towns, with limited responsibilities such as street lighting, drainage, roads, and cleanliness.

Cantonment Board: Established by the central government for civilian populations residing in cantonment areas.

Township: Provides basic amenities to employees residing in colonies near industrial plants, lacking elected members and functioning as an extension of bureaucratic structures.

Port Trust: Set up in port areas like Mumbai, Chennai, and Kolkata, managing the port facilities and offering civic services to residents.

Special Purpose Agency: Undertakes specific functions assigned to municipal corporations or municipalities.

Problems faced by Urban Local Bodies

Financial Constraints: Financial limitations pose a significant challenge to effective governance at the grassroots level.

Reliance on Intergovernmental Transfers: Urban local governments heavily rely on state governments for grants-in-aid from the state’s consolidated fund.

Inadequate Revenue Share: The revenue sources of urban bodies often fall short in comparison to their operational needs, mainly relying on various taxes. However, tax revenues are insufficient to cover service expenses, and local representatives hesitate to introduce new taxes due to electoral concerns.

Unplanned Urbanization: The absence of proper urban planning leads to challenges in meeting the growing population’s qualitative and quantitative service demands. Insufficient administrative infrastructure, unregulated expansion of settlements, unchecked growth of slums, and traffic congestion exacerbate urban poverty, unemployment, and environmental degradation.

State Government Dominance: State governments exercise extensive control over urban local bodies, limiting their autonomy in legislative, administrative, judicial, and financial matters. Municipalities must balance their budgets, with any borrowing requiring state government approval, and no distinction between revenue and capital expenditure.

Multiplicity of Agencies: The proliferation of single-purpose agencies, supervised directly by state governments and funded partially by municipal budgets, without local oversight. Examples include state transport corporations, electricity boards, and water supply departments.

Low People’s Participation: Despite relatively high literacy rates, urban residents often lack engagement with urban governance. The presence of multiple specialized agencies and unclear role boundaries further complicates public understanding and participation.

Measures and Reforms

Promoting Financial Autonomy of Urban Local Bodies: Fiscal decentralization plays a vital role in ensuring the financial independence and stability of ULBs.

Enhancing Municipal Revenue: Various Finance Commissions have emphasized the importance of boosting property tax revenue to bolster municipal finances.

Specific initiatives include: Utilizing Geographic Information Systems (GIS) and digital tools for efficient property tax administration, as recommended by the 12th Finance Commission. Establishing State Property Tax Boards, mandated by the 13th Finance Commission, to facilitate transparent and effective property tax regimes.
Enabling municipalities to levy vacant land tax, as recommended by the 14th Finance Commission.

Improving Financial Data Management: Effective maintenance and audit of accounts at the local level are essential for generating reliable financial data crucial for accessing performance grants. Both the 13th and 14th Finance Commissions have stressed the importance of better data availability as a prerequisite for accessing performance grants.

Encouraging Citizen Engagement: Active citizen participation is essential for fostering transparency and accountability in urban governance. ULBs can establish decentralized platforms like area sabhas and ward committees to facilitate dialogue and collaboration between elected representatives and citizens.

Establishing Grievance Redressal Mechanisms: ULBs can implement technology-driven platforms for citizens to lodge complaints, enhancing the responsiveness of city governments to citizens’ needs.
These platforms should also allow citizens to provide feedback and monitor the resolution of their complaints.
Addressing these institutional and procedural challenges in urban governance will enhance service delivery in cities, ultimately improving residents’ quality of life.