Why cities remain weak: implementation gaps and reform

Detail

1. The legal promise in brief

• The 74th Constitutional Amendment Act (1992) added Part IXA ("The Municipalities"), Articles 243P to 243ZG. It came into force on 1 June 1993 [2].
• Article 243W lets each state legislature give municipalities the powers they need to work as institutions of self-government. These are local bodies that make their own decisions, not just offices that carry out orders [2].
• The Twelfth Schedule lists 18 functions for urban local bodies (ULBs) [2]. ULBs are the elected municipal bodies of towns and cities: municipal corporations, municipal councils and nagar panchayats. The 18 functions include urban planning, land use, water supply, roads, public health and slum improvement.
• The catch: the word is "may", not "shall". The state decides how much power and money to hand over. Almost every gap described below comes from this choice being left to the states.

2. NCERT's verdict: gains and gaps

Gains

• Every state has passed laws that follow the 74th Amendment.
• Elections are held, and municipal bodies have the same basic structure across the country.
• Seats are reserved for women, SCs and STs, so these groups now sit on city councils. Class 9 notes that one-third of seats in urban local bodies are reserved for women.

Gaps

• Limited autonomy (the freedom to decide for themselves): states still control big decisions.
• Few subjects transferred: most of the 18 functions have not really been handed over.
• Little money of their own: local bodies depend on grants from the state and the Centre.
• As a result, they stay "agencies implementing" state and central schemes. They carry out other governments' programmes and do not plan for themselves.
• NCERT's closing line: "The true test of democracy is ... in the practice."
• Cartoons in Class 11: one asks whether poor states can find the money to fund local bodies. Another asks whether this is "the gap between theory and practice".

3. CAG performance audits of the 74th Amendment

A CAG performance audit is a check by the Comptroller and Auditor General (Article 148). It looks at whether a law or scheme achieved its goals, not only whether accounts add up.

3a. Karnataka — CAG Report No. 2 of 2020 (period 2014-15 to 2018-19)

• Functions:
• The state transferred 17 of the 18 functions on paper. Fire services were not transferred [2].

• ULBs had sole responsibility for only 3 functions, no role in 2, a limited role in 8, and were mere implementing agencies for 3. For roads and bridges, they had a dual role [2].

• Elections and councils:

• Elections were due but not held in 23 of 273 ULBs because of court cases on ward reservation [2].
• In 187 of the other 250, elections were held, but councils were not formed. The reason was court cases about rotating the reserved posts of Mayor and President [2].

• So administrators (state officials) ran 210 ULBs. CAG said this made the democratic process "meaningless" [2].

• Weak mayors: a city corporation's Mayor held office for only one year (Presidents of other ULBs for 30 months). This tenure did not match the council's 5-year term. CAG called Karnataka's mayors "on a weak footing" [2].

• Committees:
• Ward committees existed in no city corporation except BBMP (Bengaluru) [2]. Under Article 243S, ward committees are required in municipalities with a population of 3 lakh or more.
• District Planning Committees (Article 243ZD) were formed in 29 of 30 districts but met irregularly [2].

• Bengaluru's Metropolitan Planning Committee (Article 243ZE) prepared no development plan [2].

• State Finance Commission (SFC):

• An SFC is the body set up every five years under Article 243I read with 243Y. It recommends how state taxes and grants should be shared with municipalities.
• The SFCs were set up late, by 10 to 1,606 days. The state was still on its 4th SFC when the 6th was due [2].

• Under SFC recommendations, ₹44,691 crore was due to ULBs in 2014-19. Only ₹17,119 crore was released [2].

• Money of their own:

• Own revenue was only 37% of total ULB revenue in 2014-19 [2].

• ULBs collect property tax, but the state fixes rates, exemptions and the method of assessment [2].

• Parastatals: planning, land-use control, water supply and sanitation, and slum development were delivered by parastatals. Their governing boards included no elected ULB members [2].

• Staff:
• The state, not the ULB, decides staff requirement, recruitment, pay, transfers and discipline. Vacancies were large [2].

• 181 people who were not from the Karnataka Municipal Administrative Service were doing the job of Municipal Commissioner or Chief Officer, against the law [2].

• State approval of local plans: a District Urban Development Cell had to approve works paid for from municipal funds, even after the council had approved them [2].

3b. Odisha — CAG Audit Report (Local Bodies) for year ended March 2021, Report No. 3 of 2023 (period 2015-16 to 2019-20)

• Functions (18): CAG found a split [3]:
• no role in 1 (fire service);
• only implementing agency for 3 (planning for economic and social development, urban poverty alleviation, protecting weaker sections);
• dual role in 1 (roads and bridges);

• minimal or overlapping role in 13, including town planning, land use, water supply and solid waste management.

• Overdue elections:

• Elections had not been held in 112 of 114 ULBs, with delays of 41 to 3,252 days as of March 2021 [3]. (Also often quoted as 106 of 114 audited ULBs whose councils expired or were dissolved between 2016 and 2021.)
• This goes against Article 243U: a municipality's term is 5 years, and a new council must be elected before the term ends, or within 6 months of a dissolution.
• Elections are run by the State Election Commission (Article 243ZA) [3].

• Without councils, no standing committees or ward committees were formed [3].

• Parastatals "significantly eroded" ULB autonomy in urban planning, slum improvement, water supply and sewerage [3].

• Money:
• Transfers from the Centre and the state made up 91.64% of ULB funds. Own revenue was only 11.22% (FY 2015-16 to 2019-20) [3].
• Fiscal transfers fell short of SFC recommendations by ₹196.44 crore [3].
• ULBs could not use ₹286.25 crore of the ₹354.51 crore in 14th Finance Commission performance grants. These grants were tied to urban reforms and service benchmarks, which the ULBs did not meet [3].

• ULBs spent only 29–42% of the funds they had [3].

• Staff: the state controls posts, recruitment, pay and transfers. Population is the only test for fixing staff strength, and technical posts had large vacancies [3].

• Plans and approvals: no test-checked ULB prepared a development plan for its DPC. The district administration's approval was needed even for works paid for from the ULB's own funds [3].

3c. Findings common to both audits

• Staff shortages, because the state controls posts and pay.
• Late SFCs, and their advice left unimplemented.
• Supersession and administrators' rule, meaning elected councils replaced by state-appointed officials.
• Parastatals doing the core municipal work.
• CAG's verdict in both reports: the legal provisions were "not backed by decisive actions", so the spirit of the 74th Amendment has not come true [2][3].

4. Parastatal agencies: who really runs the city?

• Definition: a parastatal agency is a body set up by the state government, usually under its own Act. Examples are a development authority (for example, a city development authority), a water supply and sewerage board or a housing board. It reports to the state government, not to the elected city council.
• What they do: they handle the core Twelfth Schedule work: planning and land use, water and sewerage, housing and slums.
• Why this weakens accountability:
• A citizen with a water or flooding problem votes for a councillor.
• But the decision rests with a board the councillor does not control.

• So nobody is clearly answerable. This is the split of accountability.

• Too many agencies: one urban area can have dozens of agencies, including:

• Smart City SPVs (special purpose vehicles: companies created under the Smart Cities Mission, 2015, run by a board where state and central nominees dominate);
• integrated command and control centres.

These sit outside the council's control.

• Odisha example: the water and sewerage board, the public health engineering wing and the town planning authorities act as parastatals directly accountable to the state government [3].

5. Capacity gaps

• Too few planners:
• NITI Aayog's report "Reforms in Urban Planning Capacity in India" (September 2021) found that states' town and country planning departments need over 12,000 town planner posts.
• Fewer than 4,000 posts were sanctioned, and about half of those were vacant [4][5].

• India had about 5,000 registered planners, roughly one planner for every 75,000 urban people [5].

• Census towns with no ULB:

• A census town is a place the Census counts as urban but which has no municipality. The test is population of at least 5,000, density of at least 400 per sq km, and at least 75% of male workers in non-farm work.

• Of 7,933 urban towns, almost half are census towns, still governed as rural areas [5].

• Poor accounts and data: CAG found budgets that were "unrealistic and unscientific". Karnataka had no reliable database of properties, and its tax demand-and-collection registers were badly kept [2][3].

• NITI's fix: a central sector "500 Healthy Cities Programme" for 5 years, with priority cities picked jointly by states and local bodies [5].

6. The reform agenda

Second Administrative Reforms Commission (ARC), 6th Report "Local Governance" (2007)

• An empowered, directly elected mayor. The mayor should be chosen by voters, hold office for the full 5-year term, and have real executive power, not a one-year ceremonial role (compare Karnataka's one-year tenure [2]).
• A municipal staff cadre: a dedicated service of trained municipal officers, so that ULBs have staff of their own.
• Clear devolution through activity mapping.
• Activity mapping means splitting each of the 18 functions into smaller tasks.
• It then states which tasks belong to the municipality, which to the state and which to the Centre.

• An Expert Committee on Urban Infrastructure (2011) also recommended activity mapping for all 18 functions [6].

• Working ward committees and area sabhas. An area sabha is a meeting of all voters of a small area, such as a polling-booth area, below the ward. It gives citizens a direct say, much like the gram sabha in villages.

• Metropolitan governance: big urban areas need one co-ordinating structure.

Other levers

• Functional MPCs: Metropolitan Planning Committees under Article 243ZE, which must actually prepare plans.
• Property-tax reform: give ULBs the power to set rates, and build full property registers.
• Finance Commission conditionalities:
• A Union Finance Commission can recommend measures to strengthen a state's funds for its municipalities (Article 280(3)(c)).

• Its grants can be tied to reforms, as with the 14th FC performance grants [3].

• Municipal borrowing: letting cities raise loans and bonds against their own revenue.

Benchmark: Brazil

• Class 11's Brazil box shows a constitution that protects municipal powers directly, so the federal and state governments cannot take them away.
• India chose a different model. Under Part IXA, the powers municipalities actually get still depend on state law.

Prelims Hooks

• Part IXA = Articles 243P–243ZG. The 74th Amendment came into force on 1 June 1993. The Twelfth Schedule lists 18 functions.
• Article 243W says the state legislature "may" devolve powers. Devolution is not mandatory, which is the root of weak cities.
• Article 243U: fresh elections within 6 months of dissolution. Article 243ZA: the State Election Commission conducts ULB elections.
• Article 243S: ward committees are needed only where population is 3 lakh or more. Article 243ZE: MPC for a metropolitan area (population of 10 lakh or more).
• CAG Odisha audit (Report No. 3 of 2023): fire service was the one function where ULBs had no role, and own revenue was only 11.22% of funds.
• CAG Karnataka audit (Report No. 2 of 2020): 17 of 18 functions transferred (fire services not). The Mayor's term was only one year.
• Trap: parastatals (development authorities, water boards) answer to the state government, not to the municipal council.
• NITI Aayog (2021): about one planner per 75,000 urban people. Nearly half of 7,933 towns are census towns with no ULB.
• The Second ARC's 6th Report (2007) was on "Local Governance". It proposed a directly elected mayor, a municipal cadre and activity mapping.

Mains Points

• Constitutional form vs real power: every state has a conforming law and reserved seats. But CAG's Karnataka and Odisha audits show states keep control of functions, funds and staff (the "3Fs"). Article 243W's "may" turns ULBs into "agencies implementing" schemes. This is NCERT's "gap between theory and practice".
• Split accountability: parastatals and Smart City SPVs do the core Twelfth Schedule work outside the council. Voters cannot hold anyone clearly answerable. The fix is to put parastatals under the ULB, or at least on MPC/ULB boards, and to use activity mapping.
• Democratic deficit: overdue elections (112 of 114 Odisha ULBs, as of March 2021) and administrators' rule in 210 Karnataka ULBs break Article 243U's guarantee. Options include stronger State Election Commissions, delimitation handled by the SEC, and time-bound reservation rosters so that court cases do not stall elections.
• Reform package:
• a directly elected mayor with a full 5-year term;
• a municipal cadre;
• property-tax powers and timely SFCs;
• Finance Commission grants tied to reform;
• municipal borrowing;
• converting census towns into ULBs.

Brazil-style constitutional protection is the long-term benchmark.