Twenty-five Years of the Constitution Seventy-fourth Amendment Act (74th CAA),1992: Promise and Performance

The Context

The local bodies in India, both urban and rural, lacked constitutional status until 1992. As local government is a state subject, ¹ there were variations in nomenclature, structure and working of local bodies across states. In most states, they suffered prolonged neglect and became weak and ineffective. The state governments resorted to supersession of Urban Local Bodies (ULBs) (Sivaramakrishnan, 2000, p. 47) and elections were not held for long periods. The ULBs were characterised by weak institutional framework, functional fragmentation, inadequate finances, absence of space for citizens’ voice in governance, lack of professionalism, low public image, etc. They lacked vibrancy and suffered from inadequate devolution of powers, functions and finances. Local governance was state-centric, which persisted for over a century. It was in this context, efforts were initiated to provide constitutional status to the rural and ULBs to strengthen them administratively, functionally and financially. Accordingly, for Panchayati Raj Institutions (PRIs) and ULBs, the Constitution sixty-fourth and sixty-fifth amendment bills, respectively, were introduced in Lok Sabha on 7 August 1989 and were passed but were defeated in Rajya Sabha on 13 October 1989. With the dissolution of Lok Sabha in 1989, the Bills lapsed. They were enacted, after the elections to the tenth parliament, as the Constitution (Seventy-third Amendment) Act, 1992 (73rd CAA) and the Constitution (Seventy-fourth Amendment) Act, 1992 (74th CAA). The two legislations are complementary. The 74th CAA came into force on 1 June 1993 and the Act provided 1 year for the states to amend their municipal laws in conformity with the 74th CAA.

Failure to hold regular elections, prolonged supersessions and inadequate devolution of powers and functions to ULBs are cited as reasons for enacting the 74th CAA. The objectives of 74th CAA include setting up of a mechanism to facilitate decentralisation, define the functions and role of ULBs, provide representation to Scheduled Castes (SCs), Scheduled Tribes (STs) and women, ensure continuity of ULBs, etc. The aim is to put state–ULB relations on a firmer footing through specifying functional domain, regular elections to ULBs with fixed 5-year tenure, taxation powers, share in state revenues, constitution of Ward Committees (WCs, Article243 S) in cities with more than three lakh population to create space for closer citizen engagement in civic affairs and governance at sub-city level. The Act provides for the constitution of the State Election Commission to conduct elections fairly and regularly, State Finance Commission (SFC) to recommend principles and measures to share state revenues, District Planning Committees (DPCs) and Metropolitan Planning Committees (MPCs) to prepare district and metropolitan plans respectively for economic development and social justice. It lists out 18 core functions in the Twelfth Schedule of the Constitution for devolution to the ULBs. The states, in compliance with the 74th CAA, amended their municipal Acts, organised the ULBs in their new form, which became functional with effect from 1 June 1994. ² Some states, however, have separate legislations for SECs, SFCs, DPCs, MPCs, ³ etc.

The 74th CAA, popularly called Nagarpalika Act, considered as historic, revolutionary and path breaking, has completed 25 years of implementation. It provides a common framework for ULBs in the country to strengthen their finances, functions and functioning and to make them effective democratic institutions. Its implementation evoked mixed response, which needs discussion and analysis. This article discusses the status of ULBs before 1992, the Constitutional Amendment, its promise and performance, the National Urban Policy Framework (NUPF) and, finally, argues for revisiting the Amendment based on 25 years of experience and identifies areas that need a relook.

The 74th CAA: The Promise

The 74th CAA prescribes a mandatory framework for adoption by states and leaves it to the state’s discretion to legislate on details. It promised to facilitate decentralisation, strengthen the ULBs by devolution of powers and demarcation of their roles.

The mandatory provisions include:

A uniform three-tier municipal structure, namely corporations, municipalities and nagar panchayats (243 Q(1) constituted on the basis of population, revenue and economic base (243 Q (2)),

The reservations apply both to the ward members and chairpersons/mayors. These aim to facilitate the participation of the civic communities and empower the local bodies.

State Election Commissions and State Finance Commissions

The 73rd CAA has some provisions, which have applicability to ULBs as well. It provides for the constitution of SEC (Article 243 K) and SFC (Article 243 Y). The former is responsible to hold periodic elections to panchayats and ULBs and to conduct elections within 6 months, where the local bodies have been superseded (Article 243 ZA). The latter, to be constituted every 5 years, is to recommend grants to panchayats and ULBs to strengthen them financially to undertake the functions entrusted to them. The Article 280 of the Constitution, relating to Central Finance Commission (CFC), was also amended to make provision to recommend measures to augment the finances of panchayats and ULBs based on the recommendations of the SFCs.

Matters at the States’ Discretion

The 74th CAA left to the discretion of the states, the criteria for the constitution of different types of ULBs, the manner of election of mayors/chairperson; reservations to backward classes (Article 243 T (6), membership to Members of Parliament, Legislative Assembly and Legislative Council in the municipal council, levy of taxes and duties by the ULBs, composition and powers of SECs, SFCs, etc. As a result, though the broad framework of the ULB structure, functions and finances remains uniform in terms of the 74th CAA, there are variations in the matters of details delegated to states.

The 74th CAA Performance

The states amended the municipal Acts to incorporate the mandatory and other provisions of the 74th CAA. Regular elections to the municipal councils and election of women, SCs, STs and Backward Classes (BCs) in large numbers to the municipal councils are the two major achievements of 74th CAA. Some states introduced criteria such as two-children norm for the contestants (Andhra Pradesh ⁴ and Rajasthan), toilet in the house (Bihar), educational qualifications (Haryana), declaring non-voters as defaulters (Gujarat), etc. (National Social Watch, 2011, pp. 30–36). States like Chhattisgarh, Jharkhand and Madhya Pradesh have provision to recall the elected councillors (State Election Commission, 2018, pp. 38, 75, 95). There are variations, however, in the adoption and implementation of the discretionary provisions.

Urban Local Bodies: Types

The state conformity legislations provide for three types of ULBs as per the 74th CAA—municipal corporations for larger urban areas, municipalities for smaller urban areas and nagar panchayats for transitional areas (Article243 Q (1). In case of nagar panchayats, the nomenclature varies. They are called Town Panchayats in Kerala and Tamil Nadu and Notified Area Committees in Odisha. Kerala, however, constituted only municipal corporations and municipalities, and not nagar panchayats. In 2018, the Government of Telangana converted all 21 nagar panchayats into municipalities (Mahesh, 2018). The 13th Finance Commission (CFC), noting that there is no uniformity in the constitution of nagar panchayats, recommended that the state governments should formulate guidelines consistent with Article 243 Q (2) (GoI, 2009, para 10.133). Some states such as Andhra Pradesh, Gujarat and Maharashtra classified the municipalities into grades based on population or income criteria for administrative convenience. Such gradation is not uniform and varies from state to state.

Population Criterion

The state municipal Acts stipulate criteria for the constitution of different types of ULBs, which vary significantly among the states. For example, the size of population to constitute municipal corporations is 300,000 in most states including Andhra Pradesh, Haryana, Karnataka, Maharashtra and Telangana, one-and-a-half lakh in Bihar and Jharkhand and five lakh in West Bengal and Tripura. In smaller states, it is lower, like 50,000 in Himachal Pradesh and 70,000 in Sikkim. For constituting a municipality, the minimum population size is 40,000 in Andhra Pradesh, Bihar and Telangana and it is 50,000 in Haryana, but it is only 5,000 in Himachal Pradesh. For nagar panchayats, the minimum population size is 2,000 in Himachal Pradesh, 5,000 in Haryana, 10,000 in Bihar and 20,000 or more in Andhra Pradesh and Telangana. The Kerala Municipal Act leaves the size of population to the state government’s discretion. ⁵

The ULBs are divided into wards as per the criteria specified in the state municipal Act or rules framed under the Act. The wards generally are not uniform in size either in area or population. Rajasthan government undertook delimitation of the wards in the 193 ULBs in 2019 and the number increased to 7,200 from 5,377 in 2014. A study in Karnataka noted that the wards cover a population of 40,000 to 50,000, making accountability difficult. The delimitation of wards is considered arbitrary and neither area nor population was fixed (Chamaraj & Rao, 2003, p. 8). The states undertake delimitation periodically, particularly before the local body elections, based on the preceding census.

Municipal Councils

The strength of the municipal councils is also not uniform and varies from state to state. The state municipal Acts stipulate the strength based broadly on population. The strength varies based on ULB type, namely corporations, municipalities and nagar panchayats. In municipal corporations, the strength is 65–227 in Maharashtra and 20–45 in Haryana. In Tripura, the strength is fixed at 39 and in Odisha, the minimum strength is fixed at 39. In Maharashtra and Uttarakhand, the municipal council’s strength is between 23–65 and 4–20 respectively. In nagar panchayats, the highest is in Gujarat with 24–54 and lowest in Uttarakhand with 4–20. In Assam, the municipal corporations have a fixed strength of 31, irrespective of population. States like Gujarat and Madhya Pradesh made no distinction between municipalities and nagar panchayats in fixing council strength. In most states, the mayors and chairpersons are elected indirectly by the members of the municipal council, while in Chhattisgarh, Jharkhand and Uttar Pradesh, they are elected directly by the electorate (State Election Commission, see respective state chapters).

Reservations

All states, in their conformity legislations, provided for one-third reservation to women and in proportion to their population to SCs and STs as per the 74th CAA. Later, starting with Bihar, 18 states including Andhra Pradesh, Gujarat, Telangana and Rajasthan have increased the percentage of reservation to women to 50 in municipal councils. In Assam, though 50 per cent reservation is provided for women in all municipal councils, in Guwahati the reservation is only 33.33 per cent (Nair, 2016). In Nagaland, the provision of one-third reservation to women in municipal councils became controversial with Nagaland Mothers Association demanding for it and some tribal groups protesting as it is against customary tribal culture. The case went through a legal battle, both in High Court and Supreme Court (Jitendra, 2015, 2017).

It is significant to know the performance of elected women representatives of the municipal councils (Prasad, 2014, pp. 426–442). The critics argue that the increased representation to women has not yielded desired results as the husbands and family members began to interfere in municipal affairs, on behalf of their spouses, working as proxies and reaping benefits (Dave, 2017; Angad). A study brings out that most women councillors in Punjab are dummy candidates fielded by their husbands or relatives because of their political influence. Often, they are the wives of the councillors whose wards have been reserved. They are neither seen nor heard either in the council or in the wards, as their husbands play their role. The role of spouses was so widespread not only in the wards they represent, but even in the council, during the meetings. To check this, in Ludhiana, the Mayor banned the entry of spouses or their kin during the council meetings. Later, the ban was revoked on the representation of women councillors that their spouses are better informed of the developments in the wards (Singh, 2017). In North Delhi Municipal Corporation, the Mayor disallowed the husbands of women councillors to enter their wife’s office, as there were allegations that they were attending and influencing ward committee and other meetings and even giving orders to officials (Rajput, 2018). In a study in Vijayawada, Andhra Pradesh, the women interviewed felt that either because of reservation or family background, many women are entering local politics (Andhra Jyothi, 2019) but after getting elected to local bodies, a majority abdicate decision-making powers to men behind them, thereby becoming mere ‘stamps’.

The 74th CAA gives discretion to the state legislatures to provide reservations to the BCs (Article 243 O (e) (iii)). Accordingly, some states provided reservation for BCs, but their percentage varies from state to state. For example, Andhra Pradesh provided 34 per cent reservation, while it is only 10 per cent in Gujarat. In Karnataka, the reservations to BCs are further divided between OBC (A) and OBC (B) in the ratio of 80:20, respectively. Assam, Arunachal Pradesh, Tamil Nadu and Tripura did not provide reservations to BCs. ⁶ There is a controversy about the percentage of reservation of seats in the councils. In Tamil Nadu, the percentage of reserved seats is about 69 per cent. ⁷ There is a demand in many states to provide reservations to backward classes based on population. But, the Supreme Court put a cap that the total reservations should not exceed 50 per cent. The controversy, however, continues in many states. Reservations contributed for increase in the representation to women, SCs and STs in the municipal councils after the 74th CAA (Nair, 2016).

As per the 74th CAA, the reserved seats should be based on rotation. In some states, reservation of wards and their rotation has become controversial. In Karnataka, for example, the reservation of wards and their rotation in some municipalities was challenged in the High Court, alleging that the existing reservations are being repeated, violating the principle of rotation as envisaged under Article 243 T). The rotation criteria has led to different interpretations, criticism and even court cases. For example, in case of rotation of reserved wards in Mangaluru Municipal Corporation, the High Court of Karnataka noted that, ‘there cannot be a repetition of reservation for any ward in any category as it would be the anti-thesis of rotation’ (Devika, 2019). But the critics question whether the rotation of wards limits the term of non-reserved by prohibiting the incumbents from seeking re-election? Will the rotation of reserved wards reduce electoral accountability? Will it make the incumbents to be less responsive to the ward community during their term in office because of rotation? Will the incumbents from the non-reserved wards give a deaf year to the SCs and STs (Parthasarathy, 2016)? How far the reservations in ULBs contributed to policy and distributive outcomes at the local level? What is the impact of reservations on welfare outcomes? To what extent did the reservations contribute to the empowerment of women, SCs and STs at the local level (O’Connel, 2017)? Have the reservations resulted in participation of the groups in local decision-making or remained only to the level of representation?

Elections: State Election Commission

The states appointed SECs as per 74th CAA and in 23 of 30 states and union territories elections to the ULBs are being held under their aegis. (GoI, 2012, para 4.1.1.1). There are variations in the qualifications of State Election Commissioner —age, tenure, conditions of service, status, powers, functions, etc., between states (GoI, 2006, Table 5). For example, the tenure of State Election Commissioner is 6 years in Madhya Pradesh; 5 years in Haryana, Himachal Pradesh, Karnataka, Maharashtra, Odisha, Punjab, Uttar Pradesh and West Bengal; 4 years in Assam and Kerala; 3 years in Bihar; and 2 years in Tamil Nadu. The age limit is 65 years in Haryana, Himachal Pradesh, Uttar Pradesh and West Bengal; 64 years in Punjab and 62 years in Tamil Nadu, Odisha, Madhya Pradesh, Kerala and Assam. In states such as Odisha, Punjab and Haryana, the State Election Commissioner is given the status of a high court judge, in Bihar, the rank of Additional Secretary to Government of India and Kerala did not prescribe and left it open (ibid). Similarly, the powers and functions relating to reservation of wards and their rotation, delimitation, notification of election schedule, elections to DPCs and MPCs, etc., vary. For example, the power of the SEC after functions to make reservations and rotation of reserved wards lies with the SEC in Gujarat, Kerala, Maharashtra and West Bengal, while it rests with the government in Andhra Pradesh, Haryana, Madhya Pradesh, Punjab, Rajasthan and Uttar Pradesh (GoI, 2007, p. 34). The power of delimitation rests with the government in Andhra Pradesh, Haryana, Himachal Pradesh, Punjab, Rajasthan, Tamil Nadu and Uttar Pradesh, while it is with the SEC in Maharashtra and West Bengal (ibid). Delimitation and reservation of wards and reservation of offices of mayor and chairperson in most states is the function of the state governments. In a few states, these functions are entrusted to the SEC. For example, in Gujarat and Maharashtra, the delimitation of wards is entrusted to SEC and in Bihar, Jharkhand and Kerala, the reservations for mayors and chairpersons is entrusted to SEC (State Election Commission, 2018, see respective state chapters). Despite constitutional stipulation that the SEC should conduct the elections, once in 5 years or as required, in some states, they are unable to do so as the power of delimitation of wards is with the state government and the latter do not undertake the exercise on time to enable the SEC to hold elections as per schedule (ibid, para 3.2.1.2). This sometimes is leading to confrontation between SEC and state government and even court cases (GoI, 2006, Ch. 2).

In some states, there is prolonged delay to conduct elections to local bodies and ensure democratic governance. For example, Tamil Nadu is without elected local bodies for over 2 years, violating the constitutional requirement and depriving the local communities their right to self-governance (Radhakrishnan, 2019). Special Officers, appointed by the state government, manage the municipal affairs. Often, the elections were held only after court directions, as was the case in Andhra Pradesh, Karnataka and West Bengal in 2013 (National Social Watch, 2011, p. 31). The Telangana SEC approached the High Court with a plea that the state government is not making arrangements to hold ULB elections after their term expired (Vamshidhara, 2019, pp. 1, 5). The SECs often had to struggle to be independent in their functioning. In the process, they often get into trouble with the state governments. The Maharashtra SEC, who was sent to jail for 2 days in an alleged conflict over jurisdiction of his powers by the Maharashtra Legislative Assembly on a privilege motion in 2008, is a case in point (Chopra, 2018).

The then Andhra Pradesh Government missed around ₹3,000 crore grant from 13th Finance Commission due to delay in holding elections to ULBs (Suchitra, 2015). There are cases of flouting high court orders to hold elections (Vamshidhara, 2019). There is criticism that reservations are being made whimsically without any guidelines or criteria. This is also the case with the rotation of reserved seats. In many states, the chairpersons and mayors have shorter tenure of 1 year (GoI, 2002, para 1.11, Table 2), disabling them from having a long-term development perspective for the town/city.

Ward Committees

The 74th CAA provides for the constitution of WCs, consisting of one or more wards in cities, with more than three lakh population (Article 243 S) to provide space for citizen engagement in urban governance. The details of composition are left to the state legislature. Their functions include preparation of ward development plans, supervising implementation of development schemes and discussing matters of community interest. Only 19 states enacted legislation on WCs by 2004 and of them, 8 states constituted them (Sivaramakrishnan, 2006, p. 8). There are variations in their organisation and functioning. In Kerala, WCs are constituted for each ward in cities, with more than a lakh population and ward sabhas, where the population is less than a lakh. In Delhi, Karnataka, Maharashtra and Tamil Nadu, the WCs cover a group of wards and function as zonal committees. The population of WCs is large—in Greater Mumbai about 750,000; in Delhi 800,000; and in Chennai 420,000 (The Energy Resource Institute, 2010, pp. 6–7). In some states, there is representation to Community Based Organisations like Resident Welfare Associations in WCs. In Maharashtra, by the end of 2010, WCs were constituted only in 19 of the 23 municipal corporations (Kuruvilla & Waingankar, 2013, p. 19), and in Municipal Corporation of Greater Mumbai, they were constituted only after court directions (ibid., p. 1). Most states did not constitute WCs and where constituted, their working has not been in the spirit of 74th CAA. The weak institutional framework and political considerations seem to dictate their working. In Delhi, WC meetings are not held regularly, councillors do not seem to take them seriously and average attendance is less than 60 per cent. In Bengaluru, the WCs, constituted after High Court orders, have not been meeting regularly and exist in name only. The Indore bench of the Madhya Pradesh High Court issued a contempt notice to the Indore Municipal Commissioner for not constituting the WCs, despite court orders (The Free Press Journal, 2018). There appears to be resistance to hold WC meetings, as the councillors lack the political will (Ramani, 2018).

One of the reforms under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) is the enactment of community participation law, which envisages constitution of WCs and Area Sabhas. The fact that there should be WC for every ward and Area Sabhas at the sub-ward level under the law remained only on paper even while the programme was in operation until 2014. As a result, the WCs and Area Sabhas remained ornamental, if any. In states where WCs are constituted, they have not been functioning properly in the absence of financial powers to prepare and implement the plans. In Karnataka, a study noted that WCs have not been constituted in any of the municipal corporations, except Bengaluru even after 10 years of implementation of CAA, which is a gross violation of the Constitution. The study observed that the nomination of members to the WCs was considered non-transparent, undemocratic and criticised as extending state government’s control to local bodies through backdoor. The WC meetings are not held regularly; they lack facilities and finances and do not have access to information to work. In most cases, the meetings turn out to be grievance forums. Unless such weaknesses are addressed, WCs would remain ceremonial and the objective of power to people may not be achieved (Chamaraj & Rao, 2003, p. 6).

Development Planning

The states, in conformity with 74th CAA, made provision for DPCs and MPCs in their legislations, though not all gave effect to the provisions (Sivaramakrishnan, 2013, pp. 86–94). Most states constituted DPCs by 2009, though they have taken more than a decade and a half to do so (Kumari, 2016, pp. 383–386). The composition of DPCs varies from state to state—from 10 in Madhya Pradesh to 34 in Bihar with four-fifth elected and one-fifth nominated members. Chhattisgarh is the only state, where all members are nominated by the government (PRIA, p. 16). Some states provided reservations to women, SCs and STs (PRIA, p. 22). In most states, excluding Kerala, Bihar, Uttar Pradesh and Uttarakhand, the SEC is not responsible to conduct elections to the DPCs. In several states, the MPs, MLAs and MLCs are associated with the DPC either as a permanent or special invitee. In most states, the chairperson of zilla panchayat is the chairperson of the DPC, while in states like Chhattisgarh, Gujarat, Madhya Pradesh, Maharashtra, etc., the Minister in-charge of the district or nominated by the state government is the chairperson. It is criticised that the association of minister as chairperson is affecting the participatory processes and makes it an extended arm of the government than facilitating independent functioning.

The DPCs are responsible for the preparation of district development plans by consolidating and integrating the rural and urban plans. In Kerala, they also monitor plan implementation. They are provided institutional and technical support, though the nature of support varies from state to state (PRIA, Table 5). They have been functioning in several states during the last few years though their impact is yet to be measured. Their functioning is not fully in tune with the spirit of the 74th CAA in most states and much needs to be desired. States have not been able to establish rural–urban linkages. As the Second Administrative Reforms Commission (SARC) noted, the DPCs are stand alone in panchayat–municipal system without organic link and they hardly made any contribution to decentralised development (GoI, 2007, p. 34). It recommended for the constitution of district councils to exercise powers and functions under the Articles 243 G and 243 W and felt that once constituted, the DPCs will either cease to exist or become advisory in nature (ibid, para 3.5.7.6).

Only 6 of the 14 states required to constitute MPCs, constituted them by 2016. ⁸ The state governments are unwilling to constitute MPCs and prefer the continuation of the existing development authorities. The MPCs failed to take off except in states like Maharashtra and West Bengal. The state governments are reluctant to empower them with functions, functionaries and funds. In Karnataka, for example, successive governments showed interest to form independent agencies such as Bangalore Agenda Task Force (1999), Agenda for Bengaluru Infrastructure and Development Task Force (2010), Bangalore Vision Group (2014) and Bengaluru Blue Print Action Group (2016), but showed little interest to constitute MPC. There were writ petitions about the constitutionality of these groups. The government notified the Bangalore Metropolitan Committee (BMPC) Rules in January 2014 and constituted BMPC in September 2014 only after high court directions. But it was dissolved even before holding its first meeting and fresh elections were held in February 2016. The High Court asked the BMPC to hold meetings at regular intervals to take decisions on pleas for change of land use and also directed the BDA to submit all the land use change applications received to BMPC (The Hindu, 2014).

Even after BMPC’s constitution, the parastatals like BDA (Bangalore Development Authority) and BMRDA (Bengaluru Metropolitan Region Development Authority) continue as before. The BDA, a statutory body, continues to perform the metropolitan planning functions instead of MPC—a constitutional body. Maharashtra enacted the Maharashtra Metropolitan Region Development Authorities Act, 2016. One of its functions is to assist the MPCs to prepare development plans, formulation of schemes and execution of projects. The Authority is headed by the chief minister and its members are either ex-officio or wholly nominated by the government. This statutory body may undermine the role of MPCs.

There is also an ambiguity as to the content of the metropolitan plan and role of ULBs, MPCs and the state government. The MPCs are yet to evolve as planning bodies as per the constitutional spirit. The JNNURM reform on the constitution of MPCs as one of the conditions to access grants under the scheme and central government advisories only resulted in the enactment, but the state governments continue to be apathetic to constitute and make them functional. The states seem to prefer parastatals like development authorities for metropolitan development as in the case of Bengaluru than the constitutional bodies like MPCs.

The Second Administrative Reforms Commission (SARC) also noted that many states ignored the constitution of MPCs (GoI, 2007, para 2.6.2). The MPCs have no or weak institutional and professional backup, are inadequately equipped and lack capacity and skills to prepare district and metropolitan plans. With increased pace of urbanisation, urban planning has assumed significance as also integration of urban plans with the district and metropolitan plans, and further with state planning process. Such mechanisms have not been put in place even after 25 years of 74th CAA in most states. As a result, the constitutional provisions relating to district and metropolitan plans remained mostly on paper.

Functional Domain

The transfer of functions under 12th Schedule to ULBs has been slow. A report of the Comptroller and Auditor General of India noted that only 11 out of 31 states/UTs transferred all 18 functions to ULBs (GoI, 2012, para 4.1.1.2). In Mumbai and Pune, only 14.5 and in Jaipur only 7 functions were devolved (Economic Times, 2018, July 11). In some states, even core functions like water supply continues to be with the state government or parastatals. In Assam and Rajasthan, the Public Health Engineering Department and in Hyderabad and Chennai the city-level parastatals are responsible for the functions. A study conducted for the 14th Finance Commission noted that only three states, namely, Karnataka, Kerala and Tripura transferred all 18 functions; Andhra Pradesh and West Bengal 17; Odisha 16 and in Assam only 8 of the 18 functions are being performed by the ULBs (Chary & Prasad, 2014, Table 2.1). In Madhya Pradesh, though all 18 functions were transferred, funds and functionaries are yet to be devolved (GoI, 2012, 4.1.1.2).

One of the mandatory reforms under JNNURM was functional integration of parastatals with the ULBs. But, the state governments are unwilling and resist change, resulting in continuation of parastatals, delivering functions under the Twelfth Schedule, at the cost of constitutionally constituted ULBs. The state governments’ ease with parastatals makes true decentralisation difficult.

Finances: State Finance Commission

The 73rd and 74th CAAs provide for the constitution of SFCs once in 5 years. This is an arrangement to transfer finances from state to ULBs analogous to the CFC, recommending transfer of finances from Centre to the states. But it was left to the discretion of state governments to work out the details of their composition, tenure, consideration of reports, submission of action taken reports to the legislature, etc. This resulted in wide variations in their organisation and working across states. The Constitutional provisions relating to the constitution of SFCs regularly are not being followed scrupulously by states. Only 7 of the 32 states and union territories have constituted the SFC as per the requirement (Manoj Rai, 2018, p. 4). In 25 years, after 74th CAA, each state must have constituted 5 SFCs but only few states such as Assam, Bihar, Haryana, Kerala and Tamil Nadu constituted the fifth SFC. In Manipur, the second SFC was constituted in March 2003, while its recommendations were expected to be operational from 1 April 2001. Another unhealthy practice is constitution of SFCs in phases. For example, the third Haryana SFC was constituted in four phases over a period of one and a half years (Government of Haryana, 2008, para, 1.2). In some states, the SFCs were reconstituted with totally new members as is the case with third SFC in erstwhile Andhra Pradesh and first SFC of Chhattisgarh (Chary & Prasad, 2014, paras 4.3–4.6).

There are variations in the composition, qualifications and working practices of SFCs. For example, the Chhattisgarh third SFC had two members while the Haryana fifth SFC had nine. In many states, working or retired civil servants are being appointed as chairpersons and members of SFCs—sometimes in ex-officio capacity. This puts severe constraints on SFCs to function autonomously and make recommendations independently (Gupta & Chakraborty, 2019, p. 21). This also makes SFCs extensions of state government than constitutional bodies with autonomous functioning (GoI, 2004, para 8.34). The Twelfth CFC suggested the states should follow the CFC model of legislation for SFCs, prescribing qualifications for members and formulate rules (ibid). These recommendations have not received attention of the state governments. There is also criticism that the terms of reference of SFCs are edited in favour of the governments than local bodies. There are variations in SFC’s approach, award period and synchronisation with CFCs. The quality of reports is considered weak and patchy (GoI, 2009, para 10.126), often resulting in CFCs ⁹ making ad hoc grants, and not basing their recommendations on SFC reports as per the constitutional mandate (GoI, 2014, para 9.4). Thus, not all states have been following the constitutional provisions relating to SFCs.

The disquieting features in the working of SFCs include non-provision of office space, staff, funds and other requisites, which adversely impact their functioning and delay in report submission (Government of Assam, 2016). Some even submit after the start of the award period and delays in the consideration of the reports by the state governments and non-implementation of even accepted recommendations are not uncommon. Some SFCs took as many as 4 years as was the case with third SFC of Gujarat (Manoj Rai, 2018, p. 8). In several states, the SFCs suffer from lack of administrative support, access to authentic data and human and institutional capacities (ibid). This made the NUPF to note that the SFCs function with inadequate technical and financial support and their recommendations mostly have not been implemented (GoI, 2018, p. 58). The SFC reports in some states were never available in public domain (Manoj Rai, 2018, p. 5). The states do not seem to be taking the SFC reports seriously, which is evident from the delays in the preparation of action taken reports and their submission to the legislature. ¹⁰ These are clearly in the state’s political realm and not constitutional. This made the 13th FC to observe that the experience of SFCs has not been successful and there is no correlation between the time taken and the quality of reports (GoI, 2009, para 10.129). The acceptance of the SFC recommendations is another problem. A study showed that only one-third states accepted more than 50 per cent recommendations (Manoj Rai, 2018, p. 11.), and in some cases, even accepted recommendations are not being implemented either for procedural or other reasons. ¹¹ The NUPF recommended for strengthening the SFCs and the state governments should accept their recommendations without major modifications (GoI, 2018, p. 62). The function–finance balance, which is critical for municipal functioning, has not taken place even after 25 years of the Amendment.

Accounts

The 74th CAA entails that the state legislature should make provision for the maintenance of accounts and their audit. Most states did not streamline the accounting practices resulting in continuation of cash-based single-entry accounting system. Successive CFCs, noting this, suggested adoption of Double Entry Accounting System (DEAS) to overcome the problems of getting authentic municipal finance data to recommend grants for the ULBs. It is only during the past few years efforts are being made to migrate to DEAS, which was also part of JNNURM reform. As these attempts met with limited success, the 13th FC included accounting reforms as a condition to access performance grant (GoI, 2009, para 10.106). Despite these efforts, by 2014, only 17 states shifted to DEAS.

Municipal Governance

The 74th CAA brought changes in the political framework through reservations and regular elections, but other aspects of municipal governance remain untouched. They include election of municipal chairperson/mayor, representation to members of legislature and parliament in municipal councils, etc. In several states, the chairpersons and mayors are elected from among the elected councillors, that is, indirect election. Though in states like Madhya Pradesh, Tamil Nadu, and Uttar Pradesh, they are elected directly by the city electorate, they are not endowed with executive powers. In states like Andhra Pradesh, the MPs, MLAs and MLCs have representation in the municipal councils with voting rights. The administrative framework remained untouched despite expanding functional domain and technological innovations. The expectation that the transfer of functions under the Twelfth Schedule would be followed by transfer of funds and functionaries, increased capacities ushering in new municipal governance, did not happen. The 74th CAA mandates devolution of functions, finances and functionaries to ULBs to enable them to perform effectively. But such a devolution did not take place in requisite measure. The organisational systems and procedures also have not changed over the past 25 years.

During the past quarter century, the states instead of strengthening municipal governance continue to promote parastatals like water boards, thereby weakening the constitutionally constituted ULBs. The constitution of special purpose vehicles outside the ULB framework administering centrally sponsored schemes like Smart Cities, weakened the ULBs further. The states do not have human and institutional development and capacity enhancement policies and strategies. As a result, the ULBs suffer from inadequate investments and absence of support mechanisms.

Post-CAA there are two developments, which impacted municipal governance, namely, launching of JNNURM with its reform agenda (GoI, 2005) and the 13th FC’s conditional performance grant (GoI, 2009, para 10.161). They aim to implement 74th CAA, accounts and audit reforms, constitution of WCs, strengthening SFCs, administrative and structural reforms, etc., to improve urban governance. But the state governments did not take reform agenda seriously, resulting in non-implementation or tardy approach towards reforms. No state has fully implemented all JNNURM and 13 FC reforms. Some SFCs also underpinned the need to streamline accounting and audit systems, institutional strengthening, evolving accountability mechanisms, etc., at state and local levels. The Memorandum submitted by the Ministry of Urban Development to the 14th FC notes that 19 states entrusted technical guidance and supervision of accounts to CAG and 8, 12 and 4 states met the 13th FC conditions by March 31, 2011, 2012 and 2013, respectively (GoI, 2014). This underpins that the states are willing to forgo the CFC’s performance grant but unwilling to undertake reforms, decentralise powers, strengthen and empower local bodies.

The centrally sponsored schemes such as JNNURM, AMRUT (Atal Mission for Rejuvenation and Urban Transformation), SMART city, etc., require preparation of city-level land use, infrastructure, investment, sanitation, mobility, disaster mitigation, etc., plans for orderly and balanced growth of cities and towns and to provide basic services to the people. They also need to prepare plans to achieve service-level benchmarks stipulated by the Government of India for different services such as water, sanitation, waste management, etc., but the human and institutional capacities of cities are inadequate to prepare such plans and implement them to achieve developmental objectives. The project reports prepared by the ULBs for different schemes are mostly consultant driven. This hampers internal capacity enhancement efforts.

A closely related question is the weak governance structures of ULBs. The state governments seem to be reluctant to devolve powers to ULBs without enhancing administrative capacity and strengthening their finance base. But as perceptive observers noted, ‘If power is devolved before financing, the local government will not be able to exercise its functions appropriately. If finances are devolved without power, then municipalities may simply become more wasteful in their spending’ (Murthy & Mahin, 2015, p. 137). The ULBs continue to suffer staff shortages, capacity constraints and inappropriate skills. The existing staff is not able to meet the administrative, technical or other challenges. Many states imposed a ban on recruitment as an economy measure, to reduce escalating establishment expenditure. To fill the gap, they have been outsourcing the functions or functionaries. The fact that only 42 per cent of the projects under JNNURM were completed in the country is a clear indication of weak ULB capacity (Avashia & Garg, 2016, p. 53).

India’s urbanisation is characterised by the metropolitan growth. As per 2011 census, there are 53 million plus cities accounting for 43 per cent of total urban population. But governance of these cities is no different from others—it is uniformly the same for all cities, irrespective of the population size—hundred thousands, one million or ten million with marginal changes. The 74th CAA did not make any distinctive contribution in the governance pattern of these cities.

Impact of the 74th CAA

The 74th CAA provided constitutional status to ULBs and brought them under the justifiable part of the constitution. It brought a uniform pattern of urban governance in the country. It succeeded, in part, in operationalizing the mandatory provisions like constitution of SECs and holding elections under their superintendence, reservations to women and other vulnerable sections, 5-year tenure to elected councils, etc. One outcome of the 74th CAA is the continued existence of municipalities despite some states not holding or delaying holding elections for long periods. The 74th CAA put an end to states’ discretion to supersede or dissolve municipalities at will. Local bodies are schools of democracy, nurturing qualities of leadership, initiative and providing space to women and marginalised sections in local governance. In areas of functional devolution, with regard to constitution and working of WCs, SFCs, DPCs, MPCs, etc., the achievement is limited with variations between states. Empowerment, which is the objective of the 74th CAA, has not taken place in full measure and the ULBs continue to suffer without real powers and finances and chairpersons and mayors continue to be ceremonial without executive powers.

The SFCs are instruments to strengthen ULBs financially, to undertake their expanded functions, some of which like socio-economic planning are new, but the states seem to be reluctant to accept SFC recommendations, unlike the convention established by the Central government accepting the CFC recommendations. Delayed or non-constitution of SFCs, delayed consideration of their reports and non-implementation of even the accepted recommendations, is part of this unwillingness. This deprives the ULBs, the financial strength to undertake the functions. With weak finances, the ULBs continue to suffer under the yoke of dependency eroding their capacity to function autonomously. It is necessary to formulate operational guidelines for the constitution, composition and working of the SFCs. The district- and state-level planning bodies should develop a database to support the SFCs as and when needed.

The 74th CAA paved the way to bring power closer to the people and to strengthen local democracy. It ushered in decentralisation and visualised the municipalities as institutions of self-governance to prepare and implement plans for economic development and social justice. Political decentralisation has taken place theoretically through representation to women and weaker sections, but this is not matched by functional devolution and financial strengthening of ULBs. States continue to have dominance both over functions and finances.

There is decentralisation deficit as most states honoured the 74th CAA in letter than spirit. Political considerations continue to dictate its implementation. In the context of non-empowerment of municipalities even after 25 years of 74th CAA, a private member bill was introduced in Lok Sabha in 2016 providing for direct election of mayor, introduction of mayor-in-council system, constitution of metropolitan authority, mandatory constitution of WCs, DPC and MPCs, mandatory transfer of functions in the Twelfth Schedule, etc. (Tharoor, 2016).

Capacity Constraints

A large number of representatives get elected to the municipal councils and to a majority, it is a first visit to the municipal office and governance. They are mostly unaware of the municipal system—its laws, procedures and processes. They need orientation on the working of ULBs. Similarly, as citizen participation is critical for good urban governance, orientation to civil society assumes importance. Capacity enhancement of citizenry would enable them to become partners in municipal governance (Jha & Udas-Mankikar, 2019). But the efforts are not commensurate to the requirements.

Within a decade after 74th CAA, the National Commission to Review the Working of the Constitution reviewed its implementation and made recommendations to strengthen ULBs and to deepen local democracy. Its recommendations include mandatory devolution of powers to municipalities, creating a separate fiscal domain to local bodies, vesting the SEC with the superintendence, direction and control of preparation of electoral rolls, a fixed 5-year tenure and status of a High Court Judge to State Election Commissioner, vesting delimitation, reservation and rotation of seats with the Delimitation Commission, etc. It recommended constitutional amendments to operationalize some of these recommendations (GoI, 2002).

Revisiting 74th CAA

There is need to revisit and review the 74th CAA in the light of foregoing analysis to strengthen the ULBs functionally and financially and to make them autonomous, self-governing and empowered institutions. The review areas include how to ensure regular elections? How to devolve functions? How to make ULBs central to urban governance? How to empower SECs on the lines of Election Commission of India? How to strengthen SFCs and ensure acceptance and implementation of their recommendations by state governments? How to make SECs and SFCs effective and autonomous? How to make DPCs and MPCs functional to play their role in integrated district and metropolitan planning? How to build councillor’s, particularly women councillors’ capacity to enable them to play a developmental role? How to make ward committees integral to urban governance to make participation a reality? There is also a need for a debate and a serious discussion on issues such as rotation of reserved seats, direct and indirect election of mayors/chairpersons and empowering them with executive powers. There is a need to provide a separate municipal finance list to enable the ULBs to undertake the expanded functions. Improving the ULB’s capacity is the key to ensure political, administrative and fiscal decentralisation. The rationale behind membership to MPs, MLAs and MLCs in municipal councils with or without voting rights, transfer of funds and functionaries along with functions to ULBs, redefining urban governance structures, procedures, processes and practices, ensuring real freedom and autonomy of ULBs and a robust governance pattern for the metropolises are the other areas, which need to be looked into.

Given India’s federal framework, empowering the ULBs is possible only when the states become willing partners in the efforts (Murthy & Mahin, 2015, p. 137). But the question is how to make the state governments willing partners to realise the vision of decentralisation and empowerment of ULBs? It is necessary to incorporate the significant features of 74th CAA into the NUPF. As the NUPF noted, the 74th CAA created a framework and states should develop suitable governance solutions. It suggested Mayor-in-Council model of city governance and local leadership should come from an empowered Mayor. It is imperative to address these aspects and initiate measures to make cities and towns efficient, liveable, safe, vibrant and smart. Or else, the chasm between promise and performance of 74th CAA will widen, making power to the people a distant reality.

Declaration of Conflicting Interests

The authors declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Funding

The authors received no financial support for the research, authorship and/or publication of this article.