Empowering Urban Local Bodies in India

Table of Contents

Introduction

Urban Local Bodies (ULBs) are at the forefront of India’s urban development and governance.
Despite their critical role, a recent Comptroller and Auditor General of India (CAG) report has highlighted alarming concerns.
The report revealed a 42% gap between the resources and expenditures of ULBs across 18 states.
Additionally, only 32% of their revenue is generated independently, with the rest coming from state and central government transfers.
These challenges underline the need to reassess the structure, functions, and support provided to ULBs.

The 74th Constitutional Amendment Act, 1992, was a landmark in urban governance, establishing the constitutional framework for ULBs.
It introduced Part IX-A (Articles 243P to 243ZG) and the 12th Schedule, which lists 18 functional areas assigned to municipalities, including urban planning, public health, and infrastructure development.
Types of ULBs:
- Municipal Corporations: For cities with populations over one million (e.g., Mumbai, Delhi, Bengaluru), focusing on large-scale urban governance.
- Municipalities: Governing smaller cities with populations under one million.
- Notified Area Committees: Established for rapidly growing towns lacking adequate infrastructure.
- Town Area Committees: Manage limited functions such as drainage and street lighting in smaller towns.
- Cantonment Boards: Administer civilian areas in cantonments under the central government.
- Townships: Provide services in industrial colonies; function without elected representatives.
- Port Trusts: Manage civic amenities in port cities like Mumbai and Chennai while focusing on port administration.
- Special Purpose Agencies: Handle specific urban functions like water supply, transport, and housing.

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Urban Planning and Development: ULBs create master plans to guide sustainable urban growth and optimize land use. For instance, municipal corporations prepare comprehensive blueprints for city infrastructure.
Service Delivery: They ensure essential services like water supply, waste management, street lighting, and public health services are accessible to urban residents.
Disaster Management: ULBs lead local responses during crises, such as the Brihanmumbai Municipal Corporation’s (BMC) efforts during the COVID-19 pandemic and Mumbai floods.
Empowerment of Women and Marginalized Groups: Mandatory reservations for women and marginalized communities under the 74th Amendment have increased their participation in local governance.
Community Engagement: Through mechanisms like ward committees and public consultations, ULBs foster grassroots participation, echoing Gandhiji’s vision of ‘Poorna Swaraj’ and democratic decentralization.

Dependence on Transfers: Over 35% of ULB revenue comes from state and central transfers, which are minimal compared to other nations.
Post-GST Revenue Loss: The GST regime subsumed critical revenue sources like octroi and entertainment taxes. For example, the Municipal Corporation of Greater Mumbai (MCGM) lost ₹7,000 crore annually due to octroi abolition.
Underutilized Property Tax: Indian ULBs raise only 10-11% of revenue from property tax, compared to 20-22% in China.
Limited Taxation Powers: Unlike developed nations, ULBs in India lack authority to levy robust taxes. For example, Chinese ULBs generate substantial revenue by selling land-use rights, while Danish municipalities impose local income taxes.
Delayed State Finance Commissions: Many states fail to establish or implement State Finance Commission recommendations, limiting resource allocation.

Parastatal Agencies: State-level parastatal bodies control critical urban functions like water supply and transport, diminishing ULB autonomy.
Incomplete Devolution of Powers: States often retain control over the 18 functions listed in the 12th Schedule, undermining local governance.
Inactive District Planning Committees (DPCs): Many states lack functional DPCs, hindering integrated planning at the district level.

Election Delays: Some ULBs, like Bengaluru’s BBMP, have been without elected bodies for years due to state government delays.
Criminalization: The rise of representatives with criminal backgrounds undermines effective governance.
‘Corporator Pati’ Syndrome: Women representatives are often overshadowed by their male relatives, reducing genuine political empowerment.
Bureaucratic Control: Municipal commissioners appointed by state governments wield disproportionate power, relegating elected mayors to ceremonial roles.
Staff Shortages: Over 35% of posts in municipal corporations remain vacant, affecting service delivery.

Unplanned Urbanization: ULBs struggle with issues like slums, traffic congestion, and inadequate infrastructure due to ineffective planning.
Corruption: Scandals like contract irregularities in the Municipal Corporation of Delhi (MCD) erode public trust.
Coordination Gaps: Poor coordination among central, state, and local authorities delays policy implementation.

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Metropolitan Planning Committees: Establish these bodies to integrate and coordinate urban development.
Unified Metropolitan Transport Authority (UMTA): Streamline urban transport and traffic management.
Strengthen ULBs: Conduct regular elections, devolve functions, and ensure adequate funding.
National Urban Development and Housing Fund (NUDHF): Support housing and urban infrastructure projects.
PPP Models and E-Governance: Adopt public-private partnerships and digitize governance for greater transparency and accountability.

Enhancing Financial Autonomy: Allow ULBs to expand revenue sources and increase central funding.
Capacity Building: Train municipal staff and urban planners to address modern challenges effectively.
Citizen Participation: Strengthen ward committees and engage civil society in governance.

Empower ULBs: Grant them autonomy in urban planning and development.
Policy Reforms: Introduce stronger frameworks to ensure economic, environmental, and democratic vibrancy in urban governance.