• Dependency: The urban local bodies (ULBs) are heavily dependent on transfers from the state and central government due to the lack of finance and other required powers. This dependence hinders the ability of ULBs to function independently and make their own decisions.
• Tight control of government: The state government runs its own schemes for the ULBs with financial contribution from the Government of India (GoI). These schemes operate under tight administrative and financial control, leaving the ULBs with little room to make decisions and act on their own.
• Low encouragement by the state government: Not only does the central government exert control over the ULBs, but state governments also restrict their independence as city councillors are seen as a competition to authority of local MLAs. This lack of support and encouragement from state governments limits the ability of ULBs to effectively govern their cities.
• Ineffective leadership: Mayors and councillors are often more focused on their political careers rather than being agents of change and promoting urban reforms. This lack of effective leadership contributes to the ongoing challenges in urban governance.
• Creation of parastatal agencies: Parastatal agencies, such as urban development authorities and public corporations, are accountable only to state governments and not local governments. This further undermines the power and independence of ULBs in local governance.
• Lack of proper monitoring system: The absence of a proper monitoring system for performance of ULBs results in inefficient and improper functioning of the ULBs. This hinders their ability to effectively govern their cities and provide essential services to citizens.
• Lack of proper urban development policy: The lack of consistent and coherent urban development policy, coupled with faulty and improper urban planning, is a major challenge for municipalities. Poor implementation of development plans and regulations also contribute to these challenges.

Solutions and way forward

• More Autonomy: The urban local bodies should have more independence in their operations to provide better quality services. This can be achieved by devolving more powers and functions to ULBs in order to achieve the goal of urban self-government in true spirit.
• Strengthening Urban Institutions: Strengthening urban institutions and clarifying the roles of different organisations is crucial to ensure that they function effectively and efficiently. This will also improve accountability and transparency in the decision-making process. 
• Reforms in governance: Reforms are necessary to bring about change. The government should consider adopting a common classification of urban bodies across the country to aid in the planning process and allocation of funds. Areas with a population over 10 lakhs should be defined as metropolitan areas. The NITI Aayog report suggests taking numerous steps to boost the private sector’s engagement in national planning. These include empanelment of private sector consultancies, fair procurement of technical consultancy services, and public sector project structuring and management abilities.
• Performance-based Transfer of Funds: The transfer of state government funds to ULBs should be based on their performance. This will incentivize them to perform better and provide better services to the citizens. Ex: The Twelfth Finance Commission advocated for the use of Geographical Information Systems (GIS) and digitization to enhance property tax administration.
• Regular elections: The elections to ULBs should be conducted regularly so that there is no governance deficit and programmes for urban development are carried out in a seamless manner.
• Promote Public-Private Partnership: Effective public-private partnership programs should be formulated at the state and city levels to fund city development. The role of the state is to create a favourable environment for private sector investments in infrastructure. Ex: The Town Planning Scheme (TPS) in Gujarat is one of the best practices in urban governance, using land pooling to acquire private land for public services.
• Capacity Building: Capacity building should be an important component of programs related to urban development in order to enhance the capacity of ULBs to provide better services to the citizens. This can be achieved through training, workshops, and other programs aimed at improving the skills of the municipal staff. As recommended by NITI Aayog, States need to undertake requisite amendments in their recruitment rules to ensure the entry of qualified candidates into town-planning positions.
• Holistic Approach: It is essential to integrate different urban development and related programs at local, state, and national levels to develop sustainable cities or metropolitan regions. Urban institutions should be strengthened and the roles of various organisations should be clearly defined.
• Planning: The government must coordinate at different levels for the successful implementation of various programs. The urban local bodies should prioritise development programs and take into account the views of all stakeholders when developing any major project. Ex: Karnataka Urban Infrastructure Development & Finance Corporation (KUIDFC) has adopted a robust and effective institutional support mechanism for implementation of Smart Cities Mission in Karnataka.
• Second Generation of Urban Reforms: The second generation of urban reforms should focus on regulation, innovative financing and public-private partnerships (PPPs), and climate change initiatives. This will ensure that cities are developed in a sustainable and responsible manner, keeping in mind the long-term impacts of development on the environment.

Urban governance in India is a complex and multifaceted challenge, requiring a comprehensive approach that balances the needs of citizens, businesses, and the government. Effective urban governance requires transparency, citizen engagement, the use of technology, and a commitment to sustainable development. By adopting best practices and continuously improving their approaches, cities in India can work towards creating better and more livable urban environments for all citizens.