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Urban Local Bodies

2024 FEB 6

Mains   > Polity   >   Local Self Government   >   Urban development


GS 2    >> Polity  >>  Local Governance


16th Finance Commission reported that there is not a single elected body in all of Maharashtra’s 27 municipal corporations.


74th Amendment Act,1992 forms the basis of Urban Local Bodies in India. 74th Amendment Act added Part IX -A to the constitution, which consists of provisions from Articles 243-P to 243-ZG. It also added 12th Schedule to the Constitution. It contains 18 functional items of Municipalities.


  • Role in Urban Planning and Development - Urban local bodies are essential in managing land use, spearheading infrastructure projects, and enforcing sustainable development strategies.
  • Provision of Essential Services - They are tasked with delivering key urban services, including water supply, waste management, street lighting, and healthcare facilities to the city's inhabitants.
  • Management of Disasters and Pandemics - These bodies play a pivotal role in preparing for and managing the effects of natural calamities and public health emergencies at the community level. For example, the BMC was notably active during the COVID-19 pandemic and the Mumbai floods.
  • Promotion of Inclusive Governance - Through reservations for women and underrepresented communities in local governance, as outlined by the 73rd and 74th Amendments to the Constitution, there's a broader inclusion in municipal decision-making processes.
  • Encouragement of Community Engagement - The urban local bodies is reflective of Gandhiji’s dream of ‘Poorna Swaraj‘ through ‘Oceanic circle of power‘ and ‘democratic decentralisation‘. For ex- Mechanisms such as ward committees and public consultations help the residents to actively engage in local governance


Funding Challenges
  • Dependence on Central and State Transfers- According to the RBI Report on Municipal Finances 2022, Urban Local Bodies are dependent on state and central transfers for around 35% of their revenue. Further, the top-down transfers to the ULBs from the state and central Govt. as a percentage of GDP is extremely less in comparison with other countries.
  • Reduced Revenue raising avenues in Post-GST mechanism- ULBs have bore the burnt in the Post-GST era with the subsumption of major sources of its revenue like sales tax, octroi (in states like Maharashtra) and local entertainment taxes in the GST structure. For Ex- Loss of around ?7,000 crore, or 35% of its total revenue to Municipal Corporation of Greater Mumbai (MCGM) with the subsumption of Octroi taxes in GST regime. Also, the increase in cess and surcharges by the Central Govt, which need not be devolved, has impacted the ULBs finances.
  • Incapacity in raising direct finances from the assigned taxes- The ES 2018 has pointed out the failure of Urban Local Bodies in realising the full potential of property tax, which is the exclusive domain of Urban local bodies. For Ex- A/c to Peterson Institute of International Economics, China’s ULBs raise 20-22% of finance from property taxes while Indian ULBs raise only 10-11% from property taxes.
  • Narrow taxation powers- ULBs in India do not have wide taxation powers as compared to other developed nations. For ex- China (ULBs major component comes from selling land use rights), Denmark (Local personal Income Tax), US (City governments can impose wide-ranging taxes).
  • Lack of timely Constitution of State Finance Commission- States in India have failed in timely constitution of the state finance commissions. Further, according to RBI report, there has been a shortfall of 15% in the 15th FC recommended grants to ULBs due to attached conditionalities.
Functional Challenges
  • Parastatal agencies- Various parastatal agencies created by the State government deny the local bodies their functional autonomy. For Ex- Creation of Urban development authorities (for building infrastructure), public corporations (water, electricity, transportation services etc).
  • Improper Devolution of Functions- The power to devolve functions to local governments rests with the State Government. Most States have not devolved adequate functions to local government bodies.
  • Lack of constitution of District Planning Committee-  for the consolidation and integration of development plans prepared by the panchayats and urban local bodies. According to a study by the India Development Review, District Planning Committees are non-functional in 9 states. Further, in states where DPCs have been created, DPCs have failed to prepare integrated plans in 15 states.
Functionaries Challenges
  • Delays in conduction of Elections to ULBs- There have been delays in conduction of elections to the urban local bodies by the state Govt, as no constitutional provisions for ensuring elections to ULBs. For Ex- BBMP, the municipal corporation of Bangalore, has been without an elected body since late 2020. There have been regular delays in conduction of MCD, Chennai and Mumbai Municipal Corporations.
  • Criminalisation of the ULBs- There has been increasing criminalisation of ULBs as large number of corporators having criminal and corrupt backgrounds getting selected to the corporations and councils.
  • Corporator Pati- The real aim of political empowerment of women in urban areas has been thwarted by the emergence of Corporator pati/Mayor Pati syndrome.
  • Bureaucratic control- Many cash rich corporations are controlled by the municipal commissioners appointed by the state governments and with the Mayor just being a ceremonial head.
  • Lack of Staff- There is huge shortage of skilled staff in the Urban local bodies to carry out the designated functions entrusted to them. About 35% of posts in India’s municipal corporations are vacant (as of 2022).
Functionality Challenge
  • Ensuring Planned Urbanisation- The municipal corporations have failed in comprehensively planning the holistic urban development. These have resulted in growth of unchecked slums, traffic congestion and colonies without proper facilities such as schools, parks and hospitals.
  • Corruption- The Corruption scandals, like MCD corruption in contract award, have severely hampered the effective functionality of these bodies. Only 11 of the 35 States/Union Territories have enacted the Public Disclosure Law that mandates publishing of key civic data.
  • Lack of coordination- Poor coordination among centre, state, and various departments at local level lead to poor implementation of urban policies.



Strengthening Urban Local Bodies in India requires financial reforms, capacity enhancement, and improved governance. By fostering public participation and adopting technology, ULBs can navigate challenges to drive sustainable, inclusive urban progress.


Q:Discuss the key challenges that hinder the efficient functioning of Urban Local Governments and the corresponding measures that can be taken. (15M,250W)