Introduction to Urban Local Governance
The 74th Constitutional Amendment Act of 1992 (74th CAA) is a pivotal legislation that formalized the urban local self-government system in India. Running parallel to the 73rd CAA for rural local bodies, it granted constitutional status to Urban Local Bodies (ULBs), making them a mandatory third tier of governance. This Act aimed to revitalize and strengthen municipal bodies by ensuring their regular functioning, democratic composition, and providing a framework for their powers, functions, and finances. It introduced Part IX-A to the Constitution and listed 18 functional items in the Twelfth Schedule, thereby fostering effective urban planning, service delivery, and citizen participation.
Significance of the 74th Amendment Act
Constitutional Status
Granted constitutional recognition and protection to Municipalities, bringing them under the purview of justiciable parts of the Constitution. This ensures their existence, regular elections, and defined powers.
Mandatory ULBs
Made the establishment and functioning of ULBs mandatory across states, preventing their arbitrary dissolution or long periods of superintendence by state governments.
New Constitutional Parts
Added a new Part IX-A, titled "The Municipalities," into the Constitution, spanning Articles 243P to 243ZG, and introduced the Twelfth Schedule with 18 functional items.
Commencement
The Act came into force on June 1, 1993, marking a new era for urban governance in India.
Salient Features of the 74th Amendment Act (Articles 243P-243ZG)
Article 243P: Definitions
Defines key terms such as Metropolitan area (population of one million or more), Municipal area, Municipality, Panchayat (defined as per 73rd Act), Population, and Ward Committee.
Article 243Q: Constitution of Municipalities
Mandates three types of Municipalities: Nagar Panchayat (transitional area), Municipal Council (smaller urban area), and Municipal Corporation (larger urban area). Governor specifies areas considering population, density, revenue, non-agricultural employment, and economic importance. Industrial townships may be exempted.
Article 243R: Composition of Municipalities
All seats filled by direct election from wards. State Legislature may provide for representation of experts (non-voting), MPs/MLAs/MLCs, and Ward Committee Chairpersons. Chairperson election manner determined by State Legislature.
Article 243S: Wards Committees
Mandates Wards Committees (one or more wards) for Municipalities with population 3 lakhs or more. State Legislature makes provisions for composition, area, and seat filling. Aims for governance closer to local level.
Article 243T: Reservation of Seats
Seats reserved for SCs/STs in proportion to population (members and chairpersons). Not less than one-third (1/3rd) of total seats and chairpersons reserved for women. State Legislature may provide reservation for backward classes.
Article 243U: Duration of Municipalities
Five-year term from first meeting. Elections before expiry or within six months of dissolution. Prematurely constituted Municipality serves for remainder of term.
Article 243V: Disqualifications for Membership
Disqualification if disqualified under state legislature election law or any state law. Minimum age for contesting Municipal elections is 21 years.
Article 243W: Powers, Authority and Responsibilities
State Legislatures empower Municipalities as institutions of self-government, including preparing plans for economic development & social justice, and implementing schemes related to 18 matters in the Twelfth Schedule.
Article 243X: Finances of Municipalities
State Legislature authorizes Municipalities to levy/collect taxes, assign state taxes, provide grants-in-aid from Consolidated Fund, and constitute funds for receipts.
Article 243Y: State Finance Commission
The same State Finance Commission constituted for Panchayats (Article 243-I) reviews Municipal finances and makes recommendations to the Governor.
Article 243Z: Audit of Accounts
State Legislature may make provisions for maintenance and auditing of Municipal accounts.
Article 243ZA: State Election Commission
The same State Election Commission for Panchayats (Article 243K) supervises, directs, and controls electoral rolls and conduct of all Municipal elections.
Article 243ZB: Application to Union Territories
Provisions apply to UTs, President may direct application with modifications.
Article 243ZC: Exempted Areas
Act's provisions do not apply to Scheduled Areas (Fifth Schedule) and Tribal Areas (Sixth Schedule). Parliament can extend with modifications.
Article 243ZD: District Planning Committee (DPC)
Mandates DPC at district level to consolidate plans from Panchayats & Municipalities and prepare a draft development plan for the district. Not less than 4/5th members elected from district panchayat and municipalities.
Article 243ZE: Metropolitan Planning Committee (MPC)
Mandates MPC in every metropolitan area (population >= 1 million) to prepare a draft development plan. Not less than 2/3rd members elected from Municipalities and Panchayats in the area.
Article 243ZF: Continuance of Existing Laws
Existing municipal laws continue for one year or until amended/repealed, whichever is earlier, ensuring smooth transition.
Article 243ZG: Bar to Interference by Courts
Bars courts from interfering in electoral matters related to Municipalities, except through an election petition to the prescribed authority.
The Twelfth Schedule: 18 Functional Items
Urban Planning
Includes town planning.
Land-use & Construction
Regulation of land-use and construction of buildings.
Economic & Social Development
Planning for economic and social development.
Roads & Bridges
Construction and maintenance of roads and bridges.
Water Supply
For domestic, industrial, and commercial purposes.
Public Health & Waste Management
Sanitation, conservancy, and solid waste management.
Fire Services
Provision of fire services.
Urban Forestry & Environment
Protection of environment and promotion of ecological aspects.
Weaker Sections Safeguarding
Including the handicapped and mentally retarded.
Slum Improvement
Slum improvement and upgradation programs.
Urban Poverty Alleviation
Initiatives for reducing urban poverty.
Urban Amenities & Facilities
Parks, gardens, playgrounds, etc.
Cultural & Educational Aspects
Promotion of cultural, educational, and aesthetic aspects.
Burials & Cremations
Burials and burial grounds; cremations, cremation grounds, and electric crematoriums.
Cattle Ponds & Animal Cruelty
Cattle ponds; prevention of cruelty to animals.
Vital Statistics
Including registration of births and deaths.
Public Amenities
Street lighting, parking lots, bus stops, and public conveniences.
Slaughter Houses & Tanneries
Regulation of slaughter houses and tanneries.
Types of Urban Local Bodies (ULBs)
Beyond the three constitutional types (Nagar Panchayat, Municipal Council, Municipal Corporation), several other types of ULBs exist in India, often created by state acts or central acts, primarily serving specific purposes or transitional areas.
Constitutional Types
- Municipal Corporation: For larger urban areas (e.g., Delhi, Mumbai).
- Municipal Council: For smaller urban areas.
- Nagar Panchayat: For transitional areas (rural to urban).
Notified Area Committee
For fast-developing towns or areas not yet fulfilling Municipality conditions; entirely nominated body.
Town Area Committee
For small towns, limited civic functions (street lighting, drainage); semi-municipal, partly elected/nominated.
Cantonment Board
For civilian populations within Cantonment Areas (military garrisons); under Union Ministry of Defence; partly elected/nominated.
Township
Established by large public enterprises for employee amenities; no elected members, managed by enterprise administration.
Port Trust
Manages port areas and provides civic amenities; created by Act of Parliament; partly elected/nominated.
Special Purpose Agency
Function-based bodies (e.g., housing boards, development authorities) for specific urban functions; often independent of ULBs, leading to fragmentation.
Issues & Challenges in ULB Functioning
Urban Local Bodies, despite constitutional backing, face systemic issues that hinder their effectiveness, often mirroring the "3 Fs" of Panchayats: Lack of Funds, Functions, and Functionaries.
Lack of Funds
Weak financial base, high dependence on grants, poor own-source revenue (property tax issues, collection inefficiencies), weak SFCs, large informal economy making taxation difficult.
Inadequate Functions
Slow and incomplete devolution of powers and responsibilities from state governments for the 18 items in the Twelfth Schedule. ULBs often remain implementing agencies, not self-governing institutions.
Shortage of Functionaries
Lack of qualified staff (engineers, urban planners, financial experts), capacity constraints, and issues with deputation of state service personnel leading to lack of accountability.
Proliferation of Parastatal Agencies
Special Purpose Agencies (SPAs) often operate independently, leading to fragmentation of urban governance, lack of coordination, duplication, and undermining elected municipal bodies' authority.
Irregular Functioning of DPCs & MPCs
Despite being mandated, District and Metropolitan Planning Committees often exist only on paper or function ineffectively, failing to consolidate plans and leading to uncoordinated growth.
Rapid Urbanization Pressure
Unplanned growth, high population density, and migration strain urban infrastructure (water, sanitation, housing, transport) and civic services, outpacing ULB capacity.
Measures to Strengthen ULBs
Improving Financial Autonomy
Enhancing own-source revenue (property tax reform, digitalization), encouraging municipal bonds (e.g., Bengaluru, Ghaziabad), exploring Value Capture Financing (VCF), and performance-based grants from Finance Commissions.
Capacity Building Initiatives
Through missions like AMRUT, Smart Cities Mission, HRIDAY, Swachh Bharat Mission-Urban. Providing structured training for elected members and staff on urban planning, finance, e-governance, and citizen engagement.
E-governance & Digitalization
Online services (tax, bills, approvals), GIS-based planning, and Smart Urban Governance (ICCCs in Smart Cities) for better service delivery and transparency.
Effective SFCs, DPCs & MPCs
Ensuring timely constitution and implementation of SFC recommendations. Revitalizing DPCs and MPCs to genuinely integrate rural and urban development plans and foster coordinated growth.
Greater Citizen Participation
Promoting active citizen engagement in Ward Committees, area sabhas, and city-level planning processes. Empowering Ward Committees with clear functions and resources to address local issues and foster inclusive planning.
Prelims-ready Notes
Key Facts about 74th CAA
- Came into force: June 1, 1993.
- Added Part IX-A to Constitution: Articles 243P to 243ZG.
- Added Twelfth Schedule: lists 18 functional items.
- Types of Municipalities (Art. 243Q): Nagar Panchayat (transitional), Municipal Council (smaller urban), Municipal Corporation (larger urban). Exemption for industrial townships.
- Composition (Art. 243R): All members direct election (wards). State Legislature determines Chairperson election.
- Wards Committees (Art. 243S): Mandatory for Municipalities with population >= 3 lakhs.
- Reservation (Art. 243T): SCs/STs proportional, Women 1/3rd (members & chairpersons). BCs discretionary.
- Duration (Art. 243U): 5 years. Elections before expiry or within 6 months of dissolution. Min. age 21 for contest.
- Powers (Art. 243W): Institutions of self-government, planning for economic development & social justice, implementing schemes for 18 items.
- Finances (Art. 243X): State Legislature authorizes own taxes, assignment of state taxes, grants-in-aid.
- State Finance Commission (Art. 243Y): Same SFC for Panchayats also reviews Municipal finances.
- State Election Commission (Art. 243ZA): Same SEC for Panchayats conducts Municipal elections.
- Exempted Areas (Art. 243ZC): Scheduled Areas (V Schedule) and Tribal Areas (VI Schedule).
- District Planning Committee (DPC) (Art. 243ZD): Consolidates plans of Panchayats & Municipalities for district. Not less than 4/5th members elected.
- Metropolitan Planning Committee (MPC) (Art. 243ZE): For metropolitan areas (pop >= 1 million). Prepares development plan for area. Not less than 2/3rd members elected.
- Bar to Interference by Courts (Art. 243ZG): Electoral matters cannot be challenged in court except by election petition.
- Other ULB Types: Notified Area Committee (nominated), Town Area Committee (semi-municipal), Cantonment Board (under Defence Ministry), Township (public enterprise), Port Trust, Special Purpose Agency.
Key Constitutional Articles & Provisions (74th CAA)
| Article | Provision |
|---|---|
| 243P | Definitions (Metropolitan area, Municipality, etc.) |
| 243Q | Constitution of Municipalities (Nagar Panchayat, Municipal Council, Municipal Corporation) |
| 243R | Composition of Municipalities |
| 243S | Constitution and composition of Wards Committees |
| 243T | Reservation of seats (SC, ST, Women, BCs) |
| 243U | Duration of Municipalities |
| 243V | Disqualifications for membership |
| 243W | Powers, authority and responsibilities of Municipalities (Twelfth Schedule) |
| 243X | Powers to impose taxes by, and Funds of, the Municipalities |
| 243Y | Finance Commission (for Municipalities, same as 243-I) |
| 243Z | Audit of accounts of Municipalities |
| 243ZA | Elections to the Municipalities (State Election Commission, same as 243K) |
| 243ZB | Application to Union Territories |
| 243ZC | Part not to apply to certain areas (Scheduled & Tribal Areas) |
| 243ZD | Committee for District Planning (DPC) |
| 243ZE | Committee for Metropolitan Planning (MPC) |
| 243ZF | Continuance of existing laws and Municipalities |
| 243ZG | Bar to interference by courts in electoral matters |
Mains-ready Analytical Notes
Major Debates/Discussions
- Financial Autonomy vs. State Control: ULBs remain financially dependent. How to enhance own-source revenue and ensure adequate fund transfers?
- Role of Parastatal Agencies: Proliferation of specialized urban development agencies leads to overlap and undermines democratic accountability. Debate on integrating these under ULB control.
- Effective Urban Planning: DPCs and MPCs are meant to integrate planning, but their non-functional status means uncoordinated, fragmented urban development.
- Citizen Participation: Despite Wards Committees, participation remains low, often limited to voting, rather than active engagement in planning and oversight.
Historical/Long-term Trends, Continuity & Changes
- Pre-1992: Urban local bodies existed but lacked constitutional recognition, suffered from irregular elections, financial weakness, and excessive state control.
- Post-1992 (74th CAA):
- Shift from Administrative to Constitutional: From state statute to constitutionally mandated bodies.
- Emphasis on Planning: Introduction of DPCs and MPCs highlights a shift towards integrated and participatory urban planning.
- Increased Professionalism: Growing recognition of specialized urban management expertise.
- Digital Transformation: Increasing reliance on e-governance for efficient service delivery.
Contemporary Relevance/Significance/Impact
- Meeting Urbanization Challenges: Crucial for managing rapid urbanization, basic services, climate change impacts, sustainable urban development.
- Smart Cities & Urban Missions: ULBs are core to implementing national missions (Smart Cities, AMRUT, SBM-U).
- Economic Growth Drivers: Empowered ULBs foster conducive environment for businesses and investment.
- Inclusive Urban Development: Reservations ensure representation of women and marginalized sections.
- Disaster Management: Vital first-responder role in urban disaster management.
Real-world & Recent Examples
Indore's Swachhata Model
Continuous ranking as India's cleanest city attributed to effective ULB leadership, citizen engagement, and robust waste management infrastructure. (Source: Swachh Survekshan Reports)
Bengaluru's Municipal Bonds
Issued its first municipal bonds in 2021, marking a step towards financial independence for ULBs, followed by other cities like Ghaziabad. (Source: Economic Times, Financial Express)
Smart Cities Mission Progress
Operationalized Integrated Command and Control Centres (ICCCs) (e.g., Bhopal, Vadodara) improving urban service delivery through technology, driven by ULBs. (Source: Smart Cities Mission Dashboard, MoHUA)
Challenges of Water Stress
Many Indian cities (e.g., Chennai, Bengaluru) face severe water crises, highlighting immense pressure on ULBs to manage water supply and infrastructure effectively. (Source: Urban Development Ministry reports)
Current Affairs & Recent Developments (Last 1 Year)
Focus on Urban Climate Action
ULBs recognized as key actors in local climate action planning. Initiatives like 'Climate Smart Cities Assessment Framework 4.0' empower ULBs to integrate climate resilience and sustainability. (Source: MoHUA reports)
Urban20 (U20) under G20 Presidency
During India's G20 Presidency, U20, co-chaired by Ahmedabad, highlighted urban priorities like water security and finance, placing Indian ULBs in global spotlight. (Source: U20 official website)
Digital Public Infrastructure (DPI) for Urban Services
Continued emphasis on leveraging DPIs like ONDC for urban service delivery, aiming to integrate diverse urban services onto open digital platforms for improved efficiency. (Source: NITI Aayog, MeitY discussions)
Financing Reforms
15th Finance Commission recommended significant grants to ULBs, emphasizing performance-based grants and nudging states for property tax reforms and better collection efficiencies. (Source: 15th Finance Commission Report)
Amendment to Cantonment Act (Proposed)
Discussions to transfer civic functions of civilian areas within Cantonments to adjacent Municipalities, aligning with 74th CAA's spirit of democratic local governance. (Source: Parliamentary discussions)
UPSC Previous Year Questions (PYQs)
Prelims MCQs
UPSC CSE 2017: With reference to the 'Smart Cities Mission', which of the following statements is correct?
- (a) The concept of 'Smart City' involves providing internet connectivity to all households.
- (b) It is based on the idea of 'Smart City' in developing a comprehensive strategy for urban infrastructure development.
- (c) It is a Centrally Sponsored Scheme.
- (d) It is a Centrally Sector Scheme.
Answer: (c)
Hint/Explanation: The Smart Cities Mission is a Centrally Sponsored Scheme, meaning the central government provides financial support, but the implementation is done by ULBs/SPVs with state involvement.
UPSC CSE 2016: The constitution (74th Amendment) Act, 1992 provides for the establishment of which of the following?
- Nagar Panchayats
- Municipal Councils
- Municipal Corporations
- Cantonment Boards
Select the correct answer using the code given below:
- (a) 1, 2 and 3 only
- (b) 1, 2 and 4 only
- (c) 3 and 4 only
- (d) 1, 2, 3 and 4
Answer: (a)
Hint/Explanation: The 74th CAA provides for Nagar Panchayats, Municipal Councils, and Municipal Corporations. Cantonment Boards are statutory bodies created under a central act (Cantonments Act, 2006), not under the 74th CAA.
UPSC CSE 2011: Which one of the following is not a constitutional body?
- (a) Election Commission
- (b) Finance Commission
- (c) National Commission for Scheduled Tribes
- (d) NITI Aayog
Answer: (d)
Hint/Explanation: While this question isn't directly on 74th CAA, it relates to the broader theme of constitutional vs. non-constitutional bodies. The 74th CAA made State Election Commissions (243ZA) and State Finance Commissions (243Y) constitutional bodies related to ULBs. NITI Aayog is an executive body established by a resolution of the Union Cabinet.
Mains PYQs
UPSC CSE 2018, GS Paper II: "Proper planning and implementation of urban infrastructure projects are crucial for inclusive growth in India." Critically examine. (250 words)
Direction/Value Points:
- Link to ULBs: ULBs are primary bodies responsible for urban infrastructure and planning as per 74th CAA (Twelfth Schedule).
- Crucial for Inclusive Growth: Explain how good urban infrastructure (water, sanitation, transport, housing) impacts quality of life, economic productivity, health, and reduces inequality.
- Critical Examination (Challenges): Discuss issues like unplanned urbanization, funding gaps (ULB financial weakness), capacity constraints, proliferation of parastatal agencies, inadequate DPCs/MPCs, neglect of slums, and environmental impact.
- Implementation Gaps: Lack of citizen participation, corruption, delays, lack of coordination.
- Way Forward: Empowering ULBs (3 Fs), strengthening planning bodies, innovative financing (municipal bonds), smart city approach, citizen engagement, sustainable planning.
UPSC CSE 2020, GS Paper II: "Poverty and powerlessness are two critical dimensions of urban inequality." Discuss this statement in the context of urban local bodies. (250 words)
Direction/Value Points:
- Urban Inequality: Define poverty (slums, informal sector, lack of basic services) and powerlessness (lack of voice, exclusion from decision-making).
- ULBs' Role: As per 74th CAA, ULBs are responsible for urban poverty alleviation, slum improvement, and democratic representation.
- Challenges Faced by ULBs (leading to inequality): Limited Capacity, Financial Weakness, Bureaucratic/Elite Domination, Weak Citizen Participation, Spatial Inequality.
- Way Forward: Strengthen ULBs' financial capacity, ensure participatory planning, enhance accountability, integrate poverty alleviation schemes, ensure land tenure for urban poor, and promote inclusive urban development policies.
UPSC CSE 2021, GS Paper II: "The 73rd and 74th Constitutional Amendment Acts are crucial steps towards democratic decentralization in India, but their effectiveness is hindered by several challenges." Discuss. (250 words)
Direction/Value Points:
- Introduction: Acknowledge the revolutionary nature of both Acts.
- Crucial Steps (Effectiveness/Achievements): Constitutional Mandate, Democratic Deepening, Inclusivity (reservations for women, SC/STs), Planning & Service Delivery.
- Hindered by Challenges: The "3 Fs" (Funds: financial dependency, weak own revenue; Functions: incomplete devolution, parallel bodies; Functionaries: shortage of dedicated staff, inadequate capacity). Also, Political Interference, Bureaucratic Apathy, Weak Gram/Ward Sabhas, Non-functional DPCs/MPCs.
- Conclusion: Reiterate importance, emphasize need for reforms, stronger political will, and greater citizen engagement.
Original MCQs for Prelims
Which of the following bodies is mandated by the 74th Constitutional Amendment Act to prepare a draft development plan for a metropolitan area as a whole?
- (a) District Planning Committee
- (b) Municipal Corporation
- (c) Metropolitan Planning Committee
- (d) Wards Committee
Answer: (c)
Explanation: Article 243ZE specifically mandates the constitution of a Metropolitan Planning Committee (MPC) for every metropolitan area to prepare a draft development plan for the metropolitan area as a whole. The District Planning Committee (DPC) is for the district as a whole, consolidating both rural and urban plans.
With reference to the 74th Constitutional Amendment Act, which of the following statements is correct?
- (a) Industrial townships are mandatorily required to constitute Nagar Panchayats.
- (b) Not less than 2/3rd of the total members of a Metropolitan Planning Committee must be elected by and from amongst the elected members of municipalities and chairpersons of panchayats in that area.
- (c) The State Finance Commission for Panchayats is different from the one for Municipalities.
- (d) The Twelfth Schedule lists 29 functional items for Municipalities.
Answer: (b)
Explanation: (a) is incorrect. Industrial townships may be exempted from forming Municipalities (Article 243Q). (b) is correct. Article 243ZE mandates that not less than two-thirds of the MPC members are elected from ULBs and Panchayats in the metropolitan area. (c) is incorrect. Article 243Y states that the same SFC constituted for Panchayats shall also review the financial position of Municipalities. (d) is incorrect. The Twelfth Schedule lists 18 functional items for Municipalities. The Eleventh Schedule lists 29 items for Panchayats.
Original Descriptive Questions for Mains
"The 74th Constitutional Amendment Act introduced a robust framework for urban local governance, yet the challenge of managing India's rapid urbanization persists due to institutional gaps and resource deficits at the municipal level." Discuss. (250 words)
Key points/structure for answering:
- Introduction: Acknowledge the 74th CAA as a foundational step.
- Robust Framework: Briefly explain key provisions (types of ULBs, direct elections, reservations, Wards Committees, DPC/MPC, Twelfth Schedule).
- Challenges of Rapid Urbanization: Discuss unplanned growth, pressure on infrastructure, environmental degradation, rising urban poverty.
- Institutional Gaps and Resource Deficits: Institutional (ineffective DPCs/MPCs, proliferation of parastatal agencies); Resource (weak financial base, lack of trained human resources).
- Conclusion/Way Forward: Emphasize need to fill gaps through genuine devolution of 3 Fs, strengthening planning bodies, innovative urban financing, capacity building, and integrated strategies.
In the context of the 74th Constitutional Amendment Act, critically analyze the concept of 'Special Purpose Agencies' (SPAs) in urban governance. Do they complement or undermine the functioning of elected Urban Local Bodies? (250 words)
Key points/structure for answering:
- Introduction: Explain 74th CAA's aim to empower ULBs. Define SPAs.
- Role of SPAs (Complementary Argument): Technical Expertise (complex projects), Efficiency (single mandate), Access to Funds.
- Undermining ULBs (Critical Analysis): Fragmentation of governance, Erosion of Accountability, Duplication of Work, Resource Centralization, Lack of Citizen Connect (unelected).
- Conclusion/Way Forward: Argue SPAs must be integrated under ULB oversight for democratic accountability and comprehensive planning. Emphasize greater coordination and empowering ULBs.