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The decentralisation charade of urban local bodies

  • Category
    Polity & Governance
  • Published
    1st Dec, 2021


In India, the “disorganized” nature of urban planning habitually becomes a topic of public debate whenever cities encounter a major crisis (urban flooding in Chennai).

Since urban planning and its enforcement are routinely declared the culprit of India’s “dysfunctional” cities, it is important to examine the roots underpinning India’s current urban planning regime. 


  • Since the late 1980s, the world has been witnessing a wave of ‘decentralisation’, which is founded upon the idea of making governance more participatory and inclusive.
  • In 1992, India too embraced this wave and amended its constitution with the intent to strengthen grassroots-level democracy by decentralising governance and empowering local political bodies.
    • The objective was to create local institutions that were democratic, autonomous, financially strong, and capable of formulating and implementing plans for their respective areas and providing decentralised administration to the people.
    • It is based on the notion that people need to have a say in decisions that affect their lives and local problems are best solved by local solutions.

However today, local government or ULBs in India faces multiple issues (administrative and governing). Thus, this brief attempts to provide an analysis of the current scenario of the system and how ‘actual decentralisation of power’ can make things better.


Understanding the structure of Urban Local Bodies in India

  • The Government passed the Constitution (74th Amendment) Act, 1992with the avowed purpose of local empowerment and decentralisation.
  • However, the Act, while setting empowerment and decentralisation as objectives, ended up handing the ULBs over to the control of the states.

Salient-features of the Act

  • The Constitution (74th Amendment) Act, 1992provided for the establishment of urban local bodies (ULBs) (including municipal corporations) as institutions of local self-government. 
  • It also empowered state governments to devolve certain functions, authority, and power to collect revenue to these bodies, and made periodic elections for them compulsory. 
  • Urban governance is part of the state listunder the Constitution.  
  • Thus, the administrative framework and regulation of ULBs varies across states.
  • Levels: The Act stipulated three levels of municipal bodies to be set up in the country:
    • Nagar Panchayat: Nagar Panchayat for a transitional area (an area in transition from a rural area to an urban area).
    • Municipality: It is constituted for a smaller urban area
    • Municipal Corporation: It is constituted for a larger urban area exceeding 3 lakhs population.

Major challenges faced by Indian ULBs

  • Lack of autonomy in management: ULBs across the country lack autonomyin city management and several city-level functions are managed by parastatals (managed by and accountable to the state).  
  • Lack of fiscal autonomy: Indian ULBs are amongst the weakestin the world in terms of fiscal autonomy and have limited effective devolution of revenue.  
  • Limited source of revenue: They also have limited capacityto raise resources through their own sources of revenue such as property tax. 
  • Dependency: Lack of finance and other required power lead to a dependence on transfers by the state and central government.
  • Skin-tight control of government: Government crafts its own schemes for the ULBs run at the local level with financial contribution from the GoI. These schemes run with skin-tight administrative and financial control, asking the ULBs to essentially carry out the will of the GoI.
  • Low encouragement by state government: Not only the centre, even the states, themselves want to give no elbow room to the ULBs in local governance. 
  • State approvals: The Indian ULBs are amongst the most rigorously controlled local bodies dominated in their governance by state parastatals and functionaries.
    • State district authorities retain control of the ULBs.
    • Their chief executives get posted by states; their budgets, with certain exceptions, are subject to state approval, and mayors, in general, continue to be figure-heads with little administrative, financial, and functional powers.
    • Development plans of ULBs are subject to state approval and there are instances of very substantive changes made in their plans and regulations even against the will of the ULBs.

Impact on the governance

  • Poor service delivery: The above multiple challenges have led to poor service deliveryin cities.
  • Administrative and governance challenges: It has also created administrative and governance challenges at the municipal level.

Why the focus is shifting towards ULBs ‘now’?

  • Urbanisation in India is taking place at a faster pace than ever before.
  • It is estimated that every minute, some 30 people are migrating to Indian cities from rural areas; if the trend continues, the country’s urban population is likely to reach 600 million by 2030.
  • Cities are growth hubs for India, and the country’s transformation depends directly on their governance and sustainable urbanisation.
  • According to the Niti Aayog, India requires an INR 40-trillion investment until 2030 to overhaul its infrastructure whereas the revenue of all the municipal corporations put together is not more than INR 1.2 trillion — approximately one percent of the country’s Gross Domestic Product (GDP). 
  • Substantially underfunded mandates include crumbling municipal corporations, which lie at the core of this urban transformation challenge.

Why decentralisation is essential?

  • Good governance: In the democratic world, decentralisation is amongst the most significant instruments for good governance.
  • Greater knowledge and informed decisions: It brings decision-making closer to the people and allows authorities with greater knowledge of local conditions to make more informed decisions.

Government Schemes championing decentralization

  • Jawaharlal Nehru Urban Renewal Mission (JnNURM)
  • Smart Cities Mission
  • Atal Mission for Rejuvenation and Urban Transformation (AMRUT)

What about public participation?

  • The significance of citizen empowerment for democratic salubrity has been long recognised.
  • However, the struggle in India for institutionalising citizen’s participation in ULBs has till date been a long, unsuccessful struggle.
  • Indian ULBs have been unwilling to allow any meaningful direct citizen participation in any aspect of civic governance.
  • Considerable progress in this area has been achieved in the western world, aided by the march of technology, social media, and the ease of establishing online platforms for citizen interaction.
  • Since information flow is rapid and voluminous in the modern world, citizens in many Indian cities have formed groups and associations with a view to press for decision-making space in their own localities.
  • GoI itself initiated the Model Nagar Raj Bill to institutionalise people’s participation.

Model Nagar Raj Bill (MNRB)

  • The GoI had also drafted a Model Nagar Raj Bill (MNRB) for the consideration of and adoption by the states. 
  • The MNRB introduced the concept of ‘Area Sabha” defined as “the body of all persons registered in the electoral rolls pertaining to every polling booth in the area of a municipality.” 

 This initiative, however, fell on deaf ears of the states. Only a dozen states passed the community participation law.

Concluding thoughts

The above analysis leads to a clear conclusion that each level of government does not want to shed any authority to a lower level of government.

  • The centre works to retain all of it’s power base and keeps looking for areas of expansion of its authority.
  • The state has a similar attitude for the urban local bodies.
  • The ULBs in turn want no governance space to be ceded to wards committees.
  • And the wards committees want to have nothing to do with citizens and their groups.

All talk of decentralisation becomes a charade, to be continuously talked about without doing anything about it.


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