Context

With the 30^th Anniversary of the 73rd and 74th constitutional amendments, debates on federalism should include larger discussions on how power should be divided and shared between governments at the Union, State, and local level.

Background

• In December 1992, Parliament passed the 73rd and 74th constitutional amendments, which instituted Panchayats and municipalities, respectively.
• These amendments mandated that State governments constitute Panchayats (at the village, block and district levels) and municipalities (in the form of municipal corporations, municipal councils and Nagar Panchayats) in every region.
• They sought to institute a third-tier of governance in the federal framework through the devolution of functions, funds, and functionaries to local governments.
• Since local governments seldom derive their authority directly from the Constitution, India’s constitutional reforms for decentralisation are exceptional.
• But still despite these reforms, municipal governments are often seen to be ineffective in addressing even the most basic needs of citizens, such as reliable water supply and walkable footpaths. Urban residents tend to blame “corrupt” local politicians for these civic woes.

About

What is the basis of Local self-governance in India?

• Local self-governance is linked to the idea of subsidiarity and is typically grounded on two broad arguments.
  • First, it provides for efficient provision of public goods since governments with smaller jurisdictions can provide services as per the preferences of their residents.
  • Second, it promotes deeper democracy since governments that are closer to the people allow citizens to engage with public affairs more easily.
• The democratic decentralization through 73rd and 74th CAA, has entrusted the Local self-government with the main task of local governance, while the district administration playing an enabling and coordinating role.
• However, in several cases bureaucratic inertia and lack of empowerment of LSG (local self-government) has hindered the objective of decentralized local governance (enshrined in Art 40 of the DPSP), needing immediate reform in this regard.
• However, India is undergoing a centralising shift in its politics, economy, and culture.

Constitutional Provision:

• The Constitution (73RD and 74TH Amendment) Act, 1992 provided 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 and Panchayats are part of the state list under 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.

What do they mandate?

• The 73rd and 74th amendments require States to vest Panchayats and municipalities with the authority to enable them to function as institutions of self-government, including the powers to prepare and implement plans and schemes for economic development and social justice.
• They also mandate the regular conduct of local elections, provide for the reservation of seats for Scheduled Castes, Schedules Tribes and women in local councils, and institute participative forums like gram sabhas in Panchayats and ward committees in municipal corporations.
• Hence, the core values that the amendments sought to entrench are that of deepening local democracy and devolving functions for meeting the ends of economic development and social justice.

What are the loopholes in the local governance structure?

• Limited autonomy and authority: Despite the constitutional promise of local self-governance, local governments, especially municipalities, operate with limited autonomy and authority.
  • Limitations include the discretion given to the States regarding devolution of powers and levying of local taxes.
  • State governments are reluctant to implement the 74th amendment as cities are economic powerhouses and controlling urban land is important for financing State governments and political parties.
• Narrowing the scope of Municipalities: The courts have also mostly interpreted the 74th amendment narrowly, allowing State governments to retain their control over cities.
  • The 2021 amendment had transferred the powers of appointment of Grade C and D employees of municipalities from the Empowered Standing Committee of the municipality to the State government-controlled Directorate of Municipal Administration.