Urban Local Bodies

Context: The Uttar Pradesh State Election Commission on Sunday announced that the Urban Local Body (ULB) polls will be held in two phases on May 4 and 11, and the counting of votes will be taken up on May 13.

In the first phase, 37 districts under nine administrative divisions of Agra, Jhansi, Saharanpur, Moradabad, Prayagraj, Lucknow, Varanasi, Devipatan and Gorakhpur will go to the polls on May 4, while on May 11 voting will be held in Chitrakoot, Ayodhya, Basti, Azamgarh, Meerut, Bareilly, Aligarh, Kanpur and Mirzapur administrative divisions, said State Election Commissioner Manoj Kumar in Lucknow.

General Studies- II: Governance, Constitution, Polity, Social Justice and International relations.

• Devolution of powers and finances up to local levels and challenges therein.

Urban local government institutions/municipalities are constituted for the maintenance and planned development of urban areas. The objective is to ensure that suitable levels of infrastructure and services are available to the citizens.

In many parts of India, the quality of life in urban areas is miserable and the citizens lead a difficult life. To overcome this problem, a series of reforms have been initiated by the Indian government to strengthen local-level governance. 

In this line, we will be covering the topic in following ways: 

• Constitution (Seventy-fourth Amendment) Act Provisions
• Powers, Authority and Responsibilities of Municipalities (Article 243 – W)
• Reservation of Seats in Municipalities (Article 243 – T)
• Challenges faced by urban local bodies in accessing finance 
• Steps taken to improve urban local bodies finances 

Constitution (Seventy-fourth Amendment) Act Provisions

• Constitution of Municipalities (namely, Municipal Corporation, Municipal Council, and Nagar Panchayat) in every Indian State; 
• Constitution of Wards Committees within the territorial area of a municipality, to ensure people’s participation in civic affairs at the grass-roots level; 
• Regular and fair conduct of municipal Elections by statutorily constituted State Election Commissions; no provision for supersession of municipal governments for more than 6 months; 
• Adequate representation of weaker sections (i.e., Scheduled Caste, Scheduled Tribe, Backward Class) of the society and women in municipal governments through reservation of seats; 
• Specification by law, through the State Legislatures, of the powers (including financial) and functional responsibilities to be entrusted to municipalities and wards committees; 
• Constitution of State Finance Commissions, once in every 5 years, to review the financial position of municipalities and to make recommendations on the measures needed to improve their financial position; 
• Constitution of a District Planning Committee at the district level and a Metropolitan Planning Committee in metropolitan areas of every State, for the preparation and consolidation of development plans.

	Brief Characteristics
	Before 1992	After 1992
Municipal Corporation	Established in metropolitan areas or big cities Wider functions and larger powers than councils, enjoy more autonomy and have larger revenue resources Separation of deliberative from executive functions and vesting of all executive powers in an appointed authority who is independent of the elected body	Constituted in “large urban areas
Municipal Committee/Council	Most popular form of local government in urban areas Set up in cities and large townsExtent of State control is relatively larger than corporations	Constituted in “small urban areas”*
Nagar Panchayat	Constituted after 1992	Constituted in “areas in transition from rural to urban”*
Notified Area Committee		Abolished
Town Area Committee		Abolished

Powers, Authority and Responsibilities of Municipalities (Article 243 – W)

• Subject to the provisions of this Constitution, the Legislature of a State may, by law, endow –
• the Municipalities with such powers and authority as may be necessary to enable them to function as institutions of self-government and such law may contain provisions for the devolution of powers and responsibilities upon Municipalities, subject to such conditions as may be specified therein, with respect to:
• the preparation of plans for economic development and social justice;
• the performance of functions and the implementation of schemes as may be entrusted to them including those in relation to the matters listed in the Twelfth Schedule;
• the Committees with such powers and authority as may be necessary to enable them to carry out the responsibilities conferred upon them including those in relation to the matters listed in the Twelfth Schedule.

Twelfth Schedule 1. Urban planning, including town planning; 2. Regulation of land-use and construction of buildings; 3. Planning for economic and social development; 4. Roads and bridges; 5. Water supply for domestic, industrial and commercial purposes; 6. Public health, sanitation, conservancy and solid waste management; 7. Fire services; 8. Urban forestry, protection of the environment and promotion of ecological aspects; 9. Safeguarding the interests of weaker sections of society, including the handicapped & mentally retarded; 10. Slum improvement and upgradation; 11. Urban poverty alleviation; 12. Provision of urban amenities and facilities, such as parks, gardens, playgrounds; 13. Promotion of cultural, educational and aesthetic aspects; 14. Burials and burial grounds; cremations, cremation grounds and electric crematoriums; 15. Cattle pounds; prevention of cruelty to animals; 16. Vital statistics, including registration of births and deaths; 17. Public amenities, including street lighting, parking lots, bus stops and public conveniences; and 18. Regulation of slaughterhouses and tanneries.

Composition of Urban Local Governments

Category	Type of Municipality
Elected Members	Municipal Corporation	Municipal Council/Nagar Panchayat
Ex-officio Members	Mayor; Deputy Mayor Councillors/Elected Ward Representatives	Chairperson/President; Vice-President ƒ Councillors/Elected Ward Representatives
Appointed Staff	MPs MLAs MLCs	MPs MLAs MLCs
Nominated Members	Municipal Commissioner Subordinate Staff	Executive Officer Subordinate Staff
Nominated Members	Selected Citizens	Selected Citizens

Challenges faced by urban local bodies in accessing finance 

• Party politics exists at the municipal level.
  • The members affiliated to the largest political parties strongly influence decisions during the meetings of the local government.
  • Furthermore, it is mentioned that the appointed authorities often work under pressure created by the municipal members. In the past, several authorities have been transferred to other areas because of not cooperating with the decisions taken by the local political leaders
• Ineffective Women’s Participation in Decision-making
  • This group is unable to make a meaningful contribution on municipal matters discussed in the meetings
  • Yet another reason for ineffective participation by the women members in the decision-making process is the presence of their husbands in municipal meetings.
• Attitude of state goverments:
  • While State governments had devolved only a limited number of taxes to the ULBs to begin with, in several states, most local taxes, other than property tax, have been taken over by the state governments over the years. 
• Poor cost recovery of services by urban local governments:
  • In India user charges and service provision seem to be caught in a vicious circle with poor quality of services leading to a lack of willingness to pay for these and hence poor collection of user charges and fees. 
• Improper Maintenance of Accounts:
  • CAG reports on local governments point out several lacunae in the preparation of municipal accounts related to lack of budget preparation etc. 
• Shortcomings of State Finance Commissions:
  • Inefficient functioning of SFCs has affected their ability and that of CFCs to augment financial resources of ULBs. 
• Inability to borrow from market sources:
  • Most municipal bodies require the state governments’ permission to borrow from market sources. Growth in market financial instruments such as Municipal bonds has largely been inadequate. 
• Impact of GST:
  • Introduction of the GST has taken away critical sources of tax revenue such as octroi, local body tax, entry tax and advertisement tax for urban local governments. 
• Hidden Urbanization due to unplanned urbanization in India and a large number of settlements becoming part of urban agglomerations beyond the municipal boundaries.

Steps taken to improve urban local bodies finances 

• Recommendations of 15th finance commission: The total grants recommended for urban local bodies for 2020-21 were enhanced to Rs 29,250 crore against Rs 26,665 crore recommended for the year 2019-20 by the 14th FC. 
• Performance based grants: Successive FCs have put in conditionalities on the disbursement of grants for improving fiscal position of ULBs. 
• National Municipal Accounts Manual (NMAM): The Manual comprehensively provide details to all States/UTs in relation to the accounting policies, procedures and guidelines to ensure correct, complete timely recording of municipal transactions produce accurate relevant financial reports. 
• Allocation of funds through Schemes: Several schemes of Ministry of Housing and Urban Affairs provide financial support to ULBs for undertaking projects for development of urban infrastructure and services etc. E.g. Atal Mission for Rejuvenation and Urban Transformation (AMRUT), Smart City Mission. 
• Promotion of Municipal Bonds: In 2015, Securities and Exchange Board of India (SEBI) had released the Issue and Listing of Debt Securities by Municipalities (ILDM) Regulations and since then seven municipalities have raised nearly Rs 1,400 crore by issuing their debt securities (commonly known as 'muni bonds').