The states in India seem reluctant to empower urban local bodies both functionally as well as financially. Comment.
Based on 52 evaluated answers to this question on CollectorBabu: here is what aspirants most often missed, the mistakes that cost marks, and a model answer.
What most aspirants missed
- Art 243Y requires SFC recommendations to be placed before the legislature with an action-taken memo, yet most states delay or ignore them.
- Parastatals such as development authorities (DDA, BDA, HUDA) bypass ULBs in planning, a core functional issue.
- Property tax collection is well below potential in most ULBs, and ULB own revenue is about 0.15 percent of GDP per RBI data.
- Concrete state examples: Maharashtra's delayed municipal elections, Delhi MCD's fund crunch, Bengaluru's BBMP tussles with parastatals.
- Smart Cities Mission routed funds through state-controlled SPVs, bypassing elected councils.
- Explanation of why states resist: control over urban land, patronage, revenue and cadre postings.
Common mistakes
- Answers list constitutional provisions without assessing whether the claim of state reluctance holds.
- Financial arguments stop at saying funds are scarce, without naming specific taxes ULBs cannot levy or state caps.
- No concrete state example, so claims remain generic and unverifiable.
- Conclusions merely restate the problem without any practical reform or way forward.
What the better answers did
- Clear use of the 3Fs framework (Functions, Functionaries, Funds) to structure functional and financial reluctance.
- Specific cases: parastatals, delayed municipal elections, SFC non-implementation, and the Smart Cities SPV model.
- Balanced treatment with exceptions such as Kerala's People's Plan Campaign, which shows devolution is feasible.
- Ending with specific reforms like timely SFCs, property tax changes and a fixed-term mayoral model.
Introduction
Open by stating the 74th CAA's intent of decentralisation in one line, then flag the gap between that mandate and state practice to frame the answer.
Conclusion
Close with two or three concrete reforms, such as binding SFC follow-up and bringing parastatals under ULBs, rather than a generic call for decentralisation.
Model answer
The 74th Constitutional Amendment Act, 1992 made urban local bodies (ULBs) units of self-government under Part IXA and Articles 243W, 243X and 243Y. Three decades on, states have transferred only a fraction of the 18 functions in the 12th Schedule and keep ULB finances on a short leash. The reluctance is real, though its form varies across states.
Functional reluctance
- Parastatals such as development authorities (DDA, BDA, HUDA) plan land use and housing, bypassing elected councils.
- Water supply, urban planning and building regulation stay with state agencies in many states, and few states have transferred all 18 functions.
- Ward committees under Article 243S are not formed in several states, and municipal elections are delayed for long periods, as in Maharashtra.
- The Smart Cities Mission routed funds through state-controlled special purpose vehicles rather than elected councils.
Financial reluctance
- State Finance Commissions under Article 243I are constituted late, and their recommendations are often not acted upon, weakening Article 243Y.
- ULB own revenue is around 0.15 percent of GDP, and property tax collection is well below potential in most cities.
- States cap tax rates and grant exemptions, and GST subsumed octroi and entry tax, which ULBs once relied on.
- 15th Finance Commission grants of about Rs 4.36 lakh crore for local bodies over 2021-26 often flow through states, with conditions and delays.
Why states resist
- Control over urban land, contracts and patronage gives state politicians a stake in keeping ULBs weak.
- An empowered mayor with a secure term could become a rival centre of power in electoral competition.
- State cadre officers head many municipal bodies, so ULB staff answer to the state rather than the council.
Exceptions
Kerala's People's Plan Campaign of 1996 transferred substantial funds and planning powers to local bodies, and some states constitute SFCs on time. These show devolution is feasible, which makes blanket reluctance harder to defend.
Conclusion: The fix lies in timely SFCs with binding follow-up, a clear list of functions with parastatals brought under ULBs, property tax reform with limits on state override, and a fixed-term mayoral model. Only then will the 74th Amendment's promise of decentralisation be realised.
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