74th Constitutional Amendment Act, 1992 and Urban Local Bodies

The 74th Constitutional Amendment Act, 1992 gave constitutional status to urban local bodies, which are the elected local governments of towns and cities. It added Part IXA (Articles 243P to 243ZG) and the Twelfth Schedule to the Constitution. Because of it, every state must have elected municipalities, hold their elections regularly, reserve seats for weaker sections and women, and set up a State Finance Commission to share money with them. It came into force on 1 June 1993.

Why was it needed?

Before 1992, municipalities existed only under state laws. A state government could dissolve (suspend) an elected municipality and run it through an officer for years. Elections were often not held at all. Municipalities also had little money and few clear jobs. The idea behind the amendment was simple: a city's own people, through their elected councillors, should run local services like water, drains and roads, and they should have a fixed term and a steady supply of money.

Where did it come from?

An earlier attempt, the 65th Amendment Bill, 1989, was passed by the Lok Sabha but failed in the Rajya Sabha. A new bill was introduced in 1991 and passed by Parliament in December 1992 as the 74th Amendment. It got the President's assent on 20 April 1993 and came into force on 1 June 1993. Its twin, the 73rd Amendment, did the same for rural local bodies (panchayats) through Part IX.

Three types of municipalities (Article 243Q)

The Governor decides which type an area gets, based on population, population density, revenue, share of non-farm jobs and economic importance.

• Nagar Panchayat: for a transitional area, that is, an area moving from rural to urban.
• Municipal Council: for a smaller urban area.
• Municipal Corporation: for a larger urban area (big cities).

An area can be left out of these if it is an industrial township where an industrial company provides the civic services.

How are municipalities formed and run?

• Composition (Article 243R): Most seats are filled by direct election from wards (areas of a town). The state law may also add people with special knowledge of municipal administration (without voting rights), and local MPs and MLAs.
• Ward committees (Article 243S): Must be set up in municipalities with a population of three lakh or more.
• Reservation (Article 243T): Seats are reserved for Scheduled Castes and Scheduled Tribes in proportion to their population. At least one-third of seats (including SC/ST reserved seats) are reserved for women. States may also reserve seats for backward classes.
• Term (Article 243U): Five years from the first meeting. If a municipality is dissolved early, a new election must be held within six months.
• Disqualification (Article 243V): A person must be at least 21 years old to be a member.
• Powers and functions (Article 243W): The state may give municipalities powers to prepare plans and carry out the 18 subjects of the Twelfth Schedule.
• Money (Article 243X): The state may let municipalities collect taxes, duties, tolls and fees, give them a share of state taxes, and give them grants.
• State Finance Commission (Article 243Y): The same Commission set up under Article 243-I (every five years, by the Governor) also reviews municipal finances and recommends how to share state money with municipalities.
• Audit (Article 243Z): The state law decides how municipal accounts are kept and audited.
• State Election Commission (Article 243ZA): The body set up under Article 243K for panchayats also runs municipal elections.
• District Planning Committee (Article 243ZD): Combines the plans of panchayats and municipalities into one district plan.
• Metropolitan Planning Committee (Article 243ZE): Must be set up for every metropolitan area, defined as an area with a population of ten lakh or more. At least two-thirds of its members are elected from among municipal members and panchayat chairpersons.
• Article 243ZF: Old state laws that do not match Part IXA could continue for at most one year.
• Article 243ZG: Courts cannot question laws on delimitation of wards or allotment of seats, and election disputes can be raised only through an election petition.

The Twelfth Schedule (18 subjects)

These include urban planning and town planning, regulation of land use and buildings, roads and bridges, water supply, public health and sanitation (including solid waste management), fire services, urban forestry and environment protection, slum improvement, urban poverty alleviation, parks and playgrounds, burial and cremation grounds, cattle pounds, vital statistics (births and deaths registration), street lighting and bus stops, and regulation of slaughterhouses. The schedule is enabling, not compulsory: each state decides how many of these subjects it actually hands over.

India's position and examples

Kerala is often cited as a state that devolved many powers and funds to local bodies, under its "People's Plan Campaign" of 1996. In many other states, city planning is still done by state-run development authorities and parastatals (state-owned bodies like water boards), not by the elected municipality. Many Metropolitan Planning Committees exist only on paper, and audit reports have repeatedly found that the spirit of the 74th Amendment has not been fully achieved.

Census town vs statutory town: a key idea for this news

India has two kinds of "urban" places.

• A statutory town is any place with a municipality, corporation, cantonment board or notified town area committee. It is urban because the law says so.
• A census town is a place that is still governed as a village, but which the Census treats as urban because it meets all three tests: population of at least 5,000; at least 75% of male main workers in non-farm work; and a density of at least 400 persons per sq km.

Many census towns and peri-urban villages are urban in real life but get rural-style governance and funds. Merging them into a nearby municipality is one way to give them urban services.

Commonly confused concepts

• 73rd vs 74th Amendment: The 73rd is for panchayats (Part IX, Articles 243 to 243O, Eleventh Schedule with 29 subjects). The 74th is for municipalities (Part IXA, Articles 243P to 243ZG, Twelfth Schedule with 18 subjects).
• Metropolitan Planning Committee vs District Planning Committee: The MPC is for a metropolitan area (ten lakh or more people). The DPC is for every district.
• State Election Commission vs Election Commission of India: The SEC (Articles 243K and 243ZA) runs local body elections. The ECI (Article 324) runs elections to Parliament, state legislatures, President and Vice-President.
• Municipality vs development authority: A municipality is elected and answers to voters. A development authority is set up by the state government and run by officials.

Issues, criticism and the way forward

• Weak finances: Municipal own revenue in India is very small compared to the size of the economy. Property tax is under-collected in many cities.
• Incomplete devolution: Many states have not handed over all 18 subjects, or have given the job but not the money and staff ("functions, funds and functionaries").
• Delayed elections and State Finance Commissions: Many states delay municipal elections or set up State Finance Commissions late, or do not act on their reports.
• Unplanned urban growth: Villages on city edges grow fast without drains, roads or planning, because they remain under panchayats.
• Way forward: Experts and Finance Commissions have suggested timely elections and SFCs, publishing audited accounts, stronger property tax systems, real power for MPCs, and clear rules for when a growing village should become a town.

Concepts to Know

• Urban local body (ULB): The local government of a town or city, such as a municipal corporation, municipal council or nagar panchayat.
• Peri-urban area: Land on the outer edge of a city that is changing from village to town. It has growing houses, shops and factories, but often no city-level services.
• Delimitation of wards: Drawing the boundaries of wards so that each ward has roughly the same number of people.
• Parastatal: A body owned or run by the government (like a state water board) that does a public job but is not an elected local government.
• Devolution of 3Fs: Handing over functions (work), funds (money) and functionaries (staff) to local bodies.