Building Capacity of Urban Local Bodies

Shivam Tandon

Executive Summary

Urban Local Bodies are responsible for tasks most integral to their citizens. From bringing potable water to households to taking care of wastewater exiting from households; from waste management to street lighting; all are factors associated with the quality of living. The financial and political power of ULBs is thus something to shed light on.

With the inevitable growth of urbanisation, it is essential that our cities are resilient. The rapid rise in census towns signals a lack of administration ensuring service delivery. The jurisdiction of a Municipal Corporation may end at a certain geography, but services need to be delivered nevertheless.

With the elected officials in ULBs being closest to the citizens, it is crucial that they are empowered to fill in these gaps.

Urbanisation is the inevitable reality our society is transitioning into. Although there are different definitions for urban areas in different countries, it is generally based on parameters such as population, population density and the substantial presence of non-agricultural economic activities. As per the 2011 census, India’s urban population reached 377 million (approximately 31% of the total population). The urban population has been growing rapidly in India and the United Nations has predicted that India’s population growth will be completely urban from around 2027. (Mathur et al., 2021). The contributors to this growth are

  • Natural increase – it has remained the major contributor. However, its share dropped from 60.9% in the period 1991-2001 to 43.3% in the period 2001-11.
  • New Census Towns – its share has seen a tremendous rise from 10.2% in the period 1991-2001 to 31.2% in the period 2001-11.
  • Net Migration – its share has remained fairly constant, around 21%
  • New Statutory Towns – its share has seen a dip from 7.9% in the period 1991-2001 to 2.8% in the period 2001-11.

It is evident that there is an alarming need to focus on the growing census towns in the country. They were close to 4000 as per the 2011 census. Such settlements show urban characteristics and are yet not defined as “urban” by the government, hence, do not have the necessary administration in place.

Also Read | Towards Sustainable Growth in a World of Irreversible Urbanisation

For a substantial period of time after the independence, the country witnessed a centralised approach towards governance. The thinking “India lives in villages” needed to shift as the urban issues were becoming too big to be ignored. It was in 1993 when the 74th Constitutional Amendment recognized the importance of local governance and seek self-governing Urban Local Bodies (ULBs). (74th_CAA13.Pdf, n.d.). This agenda was pushed further with the introduction of the Jawaharlal Nehru National Urban Renewal Mission in 2005, which was replaced by the Atal Mission for Rejuvenation and Urban Transformation (AMRUT) in 2015. However, issues with the capacity of ULBs to deliver essential services to their citizens are still present.

Census Towns

It is pertinent to measure things we want to control. To control the outcome of service deliveries in urban areas, we need to ensure that our measurement of urban areas is accurate. Regions with “rural” administrative status and displaying “urban” characteristics need to be focussed on as the changes with the increase in urbanisation are causing stress on resources like land and water. For better urban management, adequate and accurate data is required for making strong policies. The state government has the authority to declare an area as urban, following which a ULB (as per the Amendment Act) is set up. The registrar general of India, based on the parameters of characterising areas as urban, defines census towns, which are treated by the state as rural and governed by panchayats. The growth of such census towns is attributed to the perceived mindset of the rural politicians that converting their status to urban would mean a loss of power. Funding from the schemes run by the union government for rural development will also be affected. (Aijaz, 2017)

These towns have immense potential for economic activities as they provide agglomeration benefits. They need to be governed by an administration wellequipped for urban needs. Unplanned urbanisation will only lead to overcrowding, stress on resources, poor sanitation and environmental harm. Standardisation of the definition of urban across India is thus important.

Political Empowerment

The Amendment provided recognition for a third tier of government. However, the desire for a self-governing local body remains in the grey as the Mayor has little say in the political affairs. This is unlike other developed nations where the Mayor plays a crucial role in the functioning of the area under its jurisdiction and also has the political incentive to be at the larger stage of elections. There should be consistency in the power, tenure and election procedure of Mayors throughout the country. Presently, it is the state government that appoints the municipal commissioner. The elected officials in the ULBs have no role to play in this. Accountability and authority remain unclear for the public and the post of Mayor reduces to a ceremonial one.

The principle of subsidiarity talks about how social and political issues should be resolved at the local level, closest to the citizens, whenever possible. The functions of a ULB as mentioned in the 12th Schedule of the constitution include regulation of land use, water supply, waste management among others. All these functions are essential to determine the quality of life in a city and its responsibility is given to the elected officials closest to the people. However, states have not devolved all the 18 functions listed, owing to the lack of capacity of ULBs, The tussle among the different tiers of government is not desirable for the masses. There is a call for a bottom-up approach towards policymaking. (Jha, 2020)

Financial Empowerment

The size of the local government is around 1% of the GDP in India, while the global average is around 6% (Verma et al., 2022). Although the State Finance Commissions (SFC) have to be set up for the fiscal distribution between states and local government as per the mandate with the 74th Amendment, it has seen little success. The states are reluctant to set up SFCs and states rarely accept the recommendations made. The RBI in the State Finances, Study of Budgets of 2021-22 report and the 15th Finance Commission report argued for the financial autonomy of the ULBs. Most of the tax collection is done by the states and the property tax, which falls under the ambit of ULBs has proven to be inadequate for matching up with the expenditures. There is a need for self-generating revenue sources and financial devolution from the states.

The practice of Municipal Bonds started over two decades ago, but it has faced hurdles from the demand side. It is important to provide credibility to attract investors. A regular system of monitoring, auditing and evaluation will help build credibility. Capacity building in terms of training personnel in the accounting, assessing financial requirements and developing feasible projects is needed. Local citizens could be potential investors for such projects and they could also hold the local elected officials accountable for the progress of projects. Public Private Partnerships (PPP) are being projected as a successful model in infrastructure projects.

Way Forward

The country needs to be prepared for the exponential growth in urban population that will take place. Economic vision-led planning is essential to tap the potential urbanisation brings along with it. The states need to come on common ground with the census to have a standard understanding of what constitutes “urban”.

Sometimes it is better to give up power. States should focus on increasing the capacity of local governments to deal with area-specific issues and have a strategic framework for the overall urban development taking place. For instance, using state-of-the-art technologies to monitor waste management and generate adequate revenues from service delivery mechanisms will help in strengthening local institutions. While talking about giving power to the ULBs, it is also important to monitor their progress and check their power with accountability. With the advent of digitalisation, transparency can be achieved.

Along with political empowerment, financial empowerment is necessary for the ULBs to deliver services efficiently. The shift towards decentralization will help the much-needed urban planning. The reforms needed, signal towards having an Urban Policy for the country.

Views expressed by: Shivam Tandon, Scholar, Indian School of Public Policy