Governing India's Cities: The 74th Amendment and the Constitutional Basis of Urban Self-Government

Municipalities and Urban Local Government

Urban Local Government refers to the administration of urban areas by people through their elected representatives. The jurisdiction of any such body is confined to a specific urban area demarcated by the state government. 'Local Government' itself figures in the State List under the Seventh Schedule of the Constitution - meaning states hold primary legislative authority over it.

There are eight types of urban local bodies in India:

1. Municipal Corporation
2. Municipality
3. Notified Area Committee
4. Town Area Committee
5. Cantonment Board
6. Township
7. Port Trust
8. Special Purpose Agency

At the Central level, urban local government matters are handled by three ministries:

• Ministry of Urban Development (created as a separate ministry in 1985) - for general urban governance
• Ministry of Defence - for cantonment boards
• Ministry of Home Affairs - for Union Territories

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Colonial Period - Key Milestones

• 1687-88: India's first municipal corporation was established at Madras.
• 1726: Municipal corporations set up in Bombay and Calcutta.
• Lord Mayo's Resolution of 1870: Focused on financial decentralisation and envisioned the growth of local self-government institutions.
• Lord Ripon's Resolution of 1882: Regarded as the 'Magna Carta' of local self-government. Ripon is celebrated as the father of local self-government in India.
• Royal Commission on Decentralisation (1907-09): Appointed in 1907, submitted its report in 1909. Chaired by Hobhouse.
• Government of India Act, 1919: Introduced dyarchy in provinces. Local self-government became a transferred subject placed under the charge of an elected Indian minister.
• Cantonments Act, 1924: Enacted by the Central legislature to govern cantonment administration.
• Government of India Act, 1935: Under provincial autonomy, local self-government was declared a provincial subject.

Key Committees and Commissions (Post-Independence)

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Before 1992, municipalities had no constitutional backing. Various attempts were made:

• 1989: Rajiv Gandhi government introduced the 65th Constitutional Amendment Bill (Nagarpalika Bill) in the Lok Sabha. It passed the Lok Sabha but was defeated in the Rajya Sabha in October 1989 and lapsed.
• 1990: V.P. Singh's National Front Government re-introduced a revised bill. It lapsed again due to the dissolution of the Lok Sabha.
• 1991: P.V. Narasimha Rao's government introduced a modified Municipalities Bill. This eventually became the 74th Constitutional Amendment Act of 1992, which came into force on 1 June 1993.

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Constitutional Additions

The act inserted a new Part IX-A into the Constitution titled 'The Municipalities', containing Articles 243-P to 243-ZG. It also added a new Twelfth Schedule listing 18 functional items assigned to municipalities (governed by Article 243-W).

The municipalities now fall within the justiciable part of the Constitution - meaning states are under a binding constitutional obligation to implement the municipal system as laid down.

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Salient Features of the 74th Amendment

1. Three Types of Municipalities

The governor classifies an area based on: population, population density, revenue generated, percentage of non-agricultural employment, and economic importance.

2. Composition

All members are directly elected by the people of the municipal area. Municipal areas are divided into wards for this purpose. The state legislature may also provide for representation of:

• Persons with special knowledge in municipal administration (without voting rights)
• Members of Lok Sabha / State Legislative Assembly whose constituencies overlap with the municipal area
• Members of Rajya Sabha / State Legislative Council registered as voters within the area
• Chairpersons of ward committees

3. Wards Committees

Mandatory in every municipality with a population of three lakh or more. A wards committee covers one or more wards. The state legislature governs the composition, territorial extent, and mode of filling seats. Additional committees beyond wards committees may also be constituted.

4. Reservation of Seats

• Seats for SCs and STs: In proportion to their share of the total municipal population.
• Women: Not less than one-third of total seats (inclusive of seats reserved for SC/ST women).
• The state legislature may also reserve seats and chairperson positions for OBCs/backward classes.
• Reservation of chairperson offices for SCs, STs, and women is determined by the state legislature.

5. Duration of Municipalities

• Fixed five-year term.
• Can be dissolved before term completion.
• If dissolved, fresh elections must be held within six months of dissolution.
• If the remaining term after dissolution is less than six months, fresh elections are not required.
• A municipality reconstituted after premature dissolution serves only the unexpired remainder of the original term - not a fresh five years.

6. Disqualifications

• A person is disqualified if ineligible under state election laws or any state legislature enactment.
• Minimum age is 21 (not 25, as applicable for state legislature seats).
• All disqualification disputes are referred to an authority determined by the state legislature.

7. State Election Commission

The superintendence, direction, and control of electoral roll preparation and conduct of all municipal elections is vested in the State Election Commission. The state legislature may legislate on related matters.

8. Powers and Functions

The state legislature may empower municipalities to function as institutions of self-government. This may include devolution of powers for:

• Preparing plans for economic development and social justice
• Implementing schemes relating to the 18 items in the Twelfth Schedule

9. Finances

The state legislature may:

• Authorise municipalities to levy and collect taxes, duties, tolls, and fees
• Assign state-collected levies to municipalities
• Provide grants-in-aid from the consolidated fund of the state
• Constitute funds for municipal monies

10. Finance Commission

The same State Finance Commission constituted for panchayats also reviews the financial position of municipalities every five years. It recommends to the Governor:

• Principles for distribution of state tax proceeds between the state and municipalities
• Taxes/fees that may be assigned to municipalities
• Grants-in-aid from the consolidated fund of the state
• Measures to strengthen municipal finances
• Any other matter referred by the Governor

The Governor places the commission's recommendations along with an action taken report before the state legislature. The Central Finance Commission may also suggest measures to augment a state's consolidated fund to supplement municipal resources.

11. Audit of Accounts

The state legislature may make provisions for maintenance and auditing of municipal accounts.

12. Application to Union Territories

The President may direct the act to apply to any UT with specified exceptions and modifications.

13. Exempted Areas

The act does not apply to:

• Scheduled Areas
• Tribal Areas in states
• Functions and powers of the Darjeeling Gorkha Hill Council (West Bengal)

14. District Planning Committee

Every state must constitute a District Planning Committee to consolidate plans of panchayats and municipalities and prepare a draft district development plan.

Key provisions:

• Four-fifths of members must be elected by elected members of the district panchayat and municipalities, from amongst themselves.
• Representation is proportional to the rural-urban population ratio of the district.
• The chairperson forwards the development plan to the state government.
• The committee must consider: spatial planning, sharing of physical/natural resources, integrated infrastructure, environmental conservation, available resources.

15. Metropolitan Planning Committee

Every metropolitan area (population of 10 lakh or more, spanning one or more districts, comprising two or more municipalities/panchayats) must have a Metropolitan Planning Committee.

Key provisions:

• Two-thirds of members elected by elected members of municipalities and panchayat chairpersons in the metropolitan area.
• Representation proportional to the population ratio between municipalities and panchayats.
• The committee must consider: plans of municipalities and panchayats, coordinated spatial planning, Government of India's priorities and investments, available resources.
• Chairperson forwards the development plan to the state government.

16. Continuance of Existing Laws and Municipalities

All state municipal laws in force continue for up to one year from 1 June 1993 (the commencement date). States had to align their laws within this period. Existing municipalities continued until the expiry of their term or earlier dissolution.

17. Bar on Court Interference in Electoral Matters

Courts cannot question the validity of laws relating to delimitation of constituencies or allotment of seats. Election challenges must be made only through election petitions filed before authorities prescribed by the state legislature.

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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, environmental protection, and ecological promotion
9. Safeguarding interests of weaker sections, including the disabled and mentally challenged
10. Slum improvement and upgradation
11. Urban poverty alleviation
12. Provision of urban amenities - parks, gardens, playgrounds
13. Promotion of cultural, educational, and aesthetic aspects
14. Burials and burial grounds, cremations and cremation grounds, electric crematoriums
15. Cattle ponds; prevention of cruelty to animals
16. Vital statistics including registration of births and deaths
17. Public amenities - street lighting, parking lots, bus stops, public conveniences
18. Regulation of slaughterhouses and tanneries

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1. Municipal Corporation

• Created for large cities (e.g., Delhi, Mumbai, Kolkata, Hyderabad, Bengaluru).
• Established by state legislature acts (for state cities) or Parliament (for UTs).
• Three authorities: Council, Standing Committees, Municipal Commissioner.
  • Council: Deliberative and legislative wing; consists of directly elected councillors and nominated persons with municipal expertise.
  • Mayor: Head of the Council; elected for a one-year renewable term in most states; largely ceremonial - presides over council meetings.
  • Standing Committees: Manage specific areas - public works, health, taxation, finance, education, etc.
  • Municipal Commissioner: Chief executive authority; implements decisions of the council; appointed by the state government; typically an IAS officer.

2. Municipality

• Established for towns and smaller cities.
• Also known as municipal council, municipal committee, municipal board, borough municipality, city municipality, etc.
• Three authorities: Council, Standing Committees, Chief Executive Officer.
  • President/Chairman: Heads the council; unlike the Mayor, the president plays a substantive executive role - not just ceremonial.
  • Chief Executive Officer / Chief Municipal Officer: Handles day-to-day administration; appointed by the state government.

3. Notified Area Committee

• Created for two types of areas:
  1. A fast-developing town due to industrialisation
  2. A town deemed important by the state government but not yet qualifying for full municipal status
• Established by a gazette notification (hence the name).
• Although it functions under the State Municipal Act, only those provisions notified in the gazette apply.
• Key distinction: It is an entirely nominated body - all members including the chairman are appointed by the state government. It is neither an elected nor a statutory body.

4. Town Area Committee

• Set up for small towns.
• A semi-municipal authority with limited civic functions: drainage, roads, street lighting, conservancy.
• Created by a separate act of the state legislature.
• Composition can be wholly elected, wholly nominated, or partly elected and partly nominated.

5. Cantonment Board

• Established for civilian population in cantonment areas (permanently stationed military zones).
• Governed by the Cantonments Act of 2006 (which repealed the 1924 Act); enacted by the Central government.
• Falls under the administrative control of the Ministry of Defence - unlike other urban bodies which are state-administered.
• 62 cantonment boards exist (as of 2016), classified into four categories by civil population:

• Composition (Category I): Military officer commanding the station (ex-officio president), executive engineer, health officer, a magistrate nominated by the district magistrate, three nominated military officers, eight elected members, and the Chief Executive Officer.
• Elected members: 5-year term. Nominated (ex-officio) members: Continue as long as they hold their station posting.
• Vice-president elected by the elected members for a 5-year term.
• Executive officer: Appointed by the President of India; belongs to a central cadre; implements board decisions.

6. Township

• Established by large public enterprises (e.g., steel plants, refineries) to provide civic amenities to their employees living in housing colonies near the plant.
• A town administrator is appointed by the enterprise; assisted by engineers and technical staff.
• No elected members - purely bureaucratic extension of the enterprise.

7. Port Trust

• Established in major port areas (Mumbai, Kolkata, Chennai, etc.) for two purposes:
  1. Managing and protecting ports
  2. Providing civic amenities
• Created by an Act of Parliament.
• Consists of both elected and nominated members; chairman is an official.
• Civic functions are broadly similar to those of a municipality.

8. Special Purpose Agency

• Unlike the above seven (which are area-based / multipurpose), special purpose agencies are function-based / single-purpose.
• They perform functions that legitimately belong to municipalities but are handled independently.
• Also called 'uni-purpose', 'single-purpose', or 'functional local bodies'.
• Examples:
  • Town improvement trusts
  • Urban development authorities
  • Water supply and sewerage boards
  • Housing boards
  • Pollution control boards
  • Electricity supply boards
  • City transport boards
• Established as statutory bodies (by state legislature) or as departments (by executive resolution).
• Operate autonomously - not subordinate to municipal corporations or municipalities.

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Three systems govern how municipal staff are appointed and managed:

1. Separate Personnel System

• Each local body independently recruits, administers, and controls its own staff.
• Personnel are not transferable between local bodies.
• Most widely prevalent system.
• Upholds local autonomy; fosters undivided loyalty to the local body.

2. Unified Personnel System

• The state government appoints and controls municipal personnel.
• State-wide cadres are created covering all urban bodies.
• Personnel are transferable between local bodies within the state.
• Prevalent in: Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Rajasthan, Madhya Pradesh.

3. Integrated Personnel System

• Municipal personnel and state government personnel belong to the same service.
• Transferable not only between local bodies but also between local bodies and state government departments.
• No distinction between local civil service and state civil service.
• Prevalent in: Odisha, Bihar, Karnataka, Punjab, Haryana.

National Training Institutions for Municipal Personnel

• All-India Institute of Local Self-Government, Mumbai - established 1927; a private registered society.
• Centre for Urban and Environmental Studies, New Delhi - set up in 1967 (on the recommendation of the Nur-ud-din Ahmed Committee).
• Regional Centres for Urban and Environmental Studies (Kolkata, Lucknow, Hyderabad, Mumbai) - set up in 1968 (on the same committee's recommendation).
• National Institute of Urban Affairs - established 1976.
• Human Settlement Management Institute - established 1985.

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1. Tax Revenue

• Property tax (most important), entertainment tax, advertisement tax, professional tax, water tax, lighting tax, pilgrim tax, market tax, octroi, toll on new bridges, etc.
• Various cesses: library cess, education cess, beggary cess.
• Octroi (tax on entry of goods into a local area for consumption/use/sale) has been abolished in most states.

2. Non-Tax Revenue

• Rent on municipal properties, fees and fines, royalty, profits and dividends, interest, user charges.
• User charges include: water charges, sanitation charges, sewerage charges.

3. Grants

• From Central and State Governments for development programmes, infrastructure schemes, and urban reform initiatives.

4. Devolution

• Transfer of funds from the state government to urban local bodies.
• Based on the recommendations of the State Finance Commission.

5. Loans

• Raised from the state government and financial institutions for capital expenditure.
• Borrowing from financial institutions requires approval of the state government.

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• Set up in 1954 under Article 263 of the Constitution by an order of the President of India.
• Originally called the Central Council of Local Self-Government; the word 'Self-Government' was dropped in the 1980s as superfluous.
• Until 1958, it covered both urban and rural local governments; thereafter, it deals exclusively with urban local government.
• It is an advisory body.
• Composition: Union Minister for Urban Development (as Chairman) + ministers for local self-government from all states.

Functions

1. Considering and recommending policy matters
2. Proposing legislation
3. Examining possibilities of Centre-State cooperation
4. Drawing up common programmes of action
5. Recommending Central financial assistance
6. Reviewing work done by local bodies using Central financial assistance

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• Ripon vs Mayo: Mayo (1870) - financial decentralisation; Ripon (1882) - Magna Carta, father of local self-government.
• 74th Amendment came into force on 1 June 1993 (not 1992 - the year it was passed).
• Notified Area Committee - entirely nominated; neither elected nor statutory.
• Cantonment Board - Central government body (not state), under Ministry of Defence; executive officer appointed by President of India.
• Township - no elected members; bureaucratic.
• District Planning Committee - 4/5 elected; Metropolitan Planning Committee - 2/3 elected.
• Metropolitan area threshold: 10 lakh population or more.
• Wards Committee mandatory for municipalities with population of 3 lakh or more.
• Minimum age for municipal membership: 21 years (not 25).
• Special Purpose Agencies - function-based, not area-based; autonomous; not subordinate to municipalities.
• Property tax is the most important source of tax revenue for municipalities.
• Octroi has been abolished in most states.
• The same State Finance Commission that reviews panchayats also reviews municipalities.
• Central Council of Local Government is constituted under Article 263.