Local Governance: the 73rd and 74th Amendments; State Election and Finance Commissions and District Planning Committees; Rural Governance, PRI Finance and Personnel, and MGNREGA; Urbanisation, Municipal and Metropolitan Governance, Urban Finance and Reforms
2. Rural governance: the tiers, PRI finance and personnel
The Gram Sabha (Article 243A) — all persons on the electoral roll of a village — is the only body of direct democracy in the structure: it approves plans and beneficiary lists, conducts social audit, and holds the Gram Panchayat to account. The Gram Panchayat is the elected executive at the village level, headed by a Sarpanch or Pradhan; the Panchayat Samiti (or block panchayat) at the intermediate level coordinates block plans; and the Zila Parishad at the district level approves district plans and supervises the lower tiers. Chairpersons of the intermediate and district tiers are elected indirectly, from among the elected members.
Finance is the weak link. Panchayats have own-source revenue (property and house tax, fees, market and fair dues, water rates), but it is typically a small fraction of their spending; the bulk comes from transfers — the State Finance Commission's share of state taxes and grants, Union Finance Commission grants to rural local bodies (substantial since the Thirteenth and Fourteenth Commissions, with the Fifteenth tying part of them to water and sanitation), and funds routed through centrally sponsored schemes. Local bodies' dependence on tied grants reduces their discretion. Personnel is the other weak link: most panchayats have only a panchayat secretary, often shared among several villages, and rely on state line-department staff who answer to their own departments rather than to the elected body; the Block Development Officer and the Zila Parishad's chief executive officer are state officials. Without "functionaries", devolved functions remain on paper.
Rural development programmes are the main business of the lower tiers. The flagship is the Mahatma Gandhi National Rural Employment Guarantee Act, 2005: as enacted, it gave every rural household whose adult members volunteer for unskilled manual work a legal right to 100 days of wage employment in a financial year; work was to be provided within fifteen days of demand, failing which an unemployment allowance was payable; at least one-third of beneficiaries were to be women; the Gram Panchayat was to execute at least half the works by cost; contractors and labour-displacing machinery were barred; and Section 17 made social audit by the Gram Sabha mandatory. It came into force in 200 districts on 2 February 2006, covered all rural districts from 2008, and was renamed after Mahatma Gandhi in 2009. Its administrative significance lies in the rights-based, demand-driven design, as opposed to supply-driven schemes, and in the transparency tools it pioneered.
3. Urbanisation and urban governance
India's urban population rose from about 17 per cent in 1951 to 31.1 per cent at the 2011 Census (about 377 million people), and the number of census towns — settlements that are urban in character but governed as villages — grew sharply, a sign that urban governance lags urbanisation. Article 243Q provides for three kinds of municipality: a Nagar Panchayat for a transitional area (from rural to urban), a Municipal Council for a smaller urban area, and a Municipal Corporation for a larger urban area — the criteria (population, density, revenue, non-agricultural employment) being set by each state.
| Body | Deliberative wing | Executive wing |
|---|---|---|
| Municipal Corporation | Elected council of corporators headed by a Mayor (directly or indirectly elected, usually for a short term in most states); standing committees | Municipal Commissioner, a state-appointed officer (often IAS) holding the executive powers — the "commissioner system" |
| Municipal Council | Elected councillors with a chairperson or president | Executive or chief officer appointed by the state |
| Nagar Panchayat | Elected members with a chairperson | Executive officer |
The Twelfth Schedule's functions range from urban planning, land-use regulation and roads to water supply, public health, sanitation and solid waste management, fire services, slum improvement, urban poverty alleviation, parks, burial grounds and vital statistics. Metropolitan governance is fragmented: a metropolitan region contains several municipal bodies, panchayats, parastatal development authorities and utilities created by state statute (water boards, transport corporations) that are not accountable to the elected councils, and the Metropolitan Planning Committees required by Article 243ZE have been constituted in only a few metropolitan areas. Urban finance comes from property tax (the main own tax), professional tax, advertisement tax, user charges, fees, state transfers and Finance Commission grants; octroi has been abolished everywhere and the local taxes subsumed in the GST (2017) cut municipal own revenue further. Some cities have raised municipal bonds — Ahmedabad's issue of 1998 was the first without a state guarantee, and Pune revived the market in 2017. Personnel systems are of three kinds: separate (each municipality appoints its own staff), unified (a state-wide municipal service transferable among municipalities) and integrated (municipal staff are part of the state's own services).
4. Reforms in urban governance: solid waste, Smart Cities and AMRUT
Solid waste management is a core municipal function under the Solid Waste Management Rules, 2016, which require segregation at source into biodegradable, non-biodegradable and domestic hazardous waste, door-to-door collection, user fees, integration of informal waste-pickers, and scientific processing and disposal, with extended producer responsibility for packaging. The Swachh Bharat Mission (launched 2 October 2014), with its urban and rural wings, and its second phase from 2021, funded toilets, collection and processing, and ranked cities in the annual Swachh Survekshan survey.
| Mission | Launched | Design |
|---|---|---|
| JNNURM (Jawaharlal Nehru National Urban Renewal Mission) | 2005 | Infrastructure and basic services to the urban poor in selected cities, with funds conditional on mandatory reforms — implementing the 74th Amendment, property-tax reform, accrual accounting, repeal of urban land ceiling |
| Smart Cities Mission | 25 June 2015 | 100 cities chosen through a competition; area-based development (retrofitting, redevelopment, greenfield) and pan-city technology solutions; implemented through a company-form special purpose vehicle in each city |
| AMRUT (Atal Mission for Rejuvenation and Urban Transformation) | 25 June 2015; AMRUT 2.0 from 1 October 2021 | Basic infrastructure — water supply, sewerage, storm-water drainage, urban transport, green spaces — in about 500 cities, with reforms in municipal governance and credit rating; AMRUT 2.0 aims at water security in all statutory towns |
Key takeaways
- The 73rd Amendment (Part IX, Eleventh Schedule, 29 subjects) took effect on 24 April 1993; the 74th (Part IXA, Twelfth Schedule, 18 subjects) on 1 June 1993.
- State Election Commissions (243K), State Finance Commissions (243I, every five years), District Planning Committees (243ZD) and Metropolitan Planning Committees (243ZE) are the amendments' institutions.
- The Gram Sabha is the one body of direct democracy; PRIs remain weak in own revenue and dedicated personnel — the "three Fs" problem.
- MGNREGA (2005; misprinted "MGNAREGA" in the syllabus) was a rights-based, demand-driven guarantee of 100 days' work with mandatory social audit under Section 17.
- Article 243Q sets up Nagar Panchayats, Municipal Councils and Municipal Corporations; the Smart Cities Mission and AMRUT were both launched on 25 June 2015.
Practice questions (10)
Attempt each one before opening the answer. Every explanation names the tempting wrong option as well as the right one, because that is where marks are lost.
How many subjects are listed in the Eleventh Schedule, which the 73rd Amendment added for panchayats? Type a number.
Numerical answer — type the value.
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Answer: 29
The Eleventh Schedule lists 29 subjects for panchayats; the Twelfth Schedule, added by the 74th Amendment, lists 18 for municipalities.Which of the following is a voluntary, not a mandatory, provision of the 73rd Amendment?
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Answer: B — Reservation of seats for backward classes
States may reserve seats for backward classes but are not required to. Women's one-third reservation, the State Finance Commission and direct elections are mandatory.Which of the following were features of MGNREGA as enacted in 2005? Select all that apply.
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Answer: A — A legal entitlement to 100 days of wage employment per rural household per year; C — Mandatory social audit by the Gram Sabha
The Act guaranteed 100 days to any rural household willing to do unskilled manual work and made social audit mandatory under Section 17. It barred contractors, and it was universal, not caste-restricted.Under Article 243Q, a Nagar Panchayat is constituted for:
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Answer: D — A transitional area, in transition from a rural to an urban area
Article 243Q provides Nagar Panchayats for transitional areas, Municipal Councils for smaller urban areas and Municipal Corporations for larger ones. Metropolitan areas get a Metropolitan Planning Committee under Article 243ZE.Assertion (A): Many panchayats cannot perform the functions formally devolved to them. Reason (R): Devolution of the Eleventh Schedule subjects is left to the states, and panchayats depend on tied transfers and on line-department staff who answer to their own departments. Choose the correct option.
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Answer: A — Both A and R are true, and R is the correct explanation of A
Both are true and R explains A: without matching funds and functionaries the functions devolved on paper cannot be carried out — the "three Fs" problem.The State Finance Commission is provided for in which article?
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Answer: A — Article 243I
Article 243I (read with 243Y for municipalities) requires a State Finance Commission every five years. 243K is the State Election Commission, 243ZD the District Planning Committee and 280 the Union Finance Commission.Which of the following statements about urban finance and personnel are correct? Select all that apply.
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Answer: A — Property tax is the principal own tax of most municipalities; C — In a unified personnel system, staff belong to a state-wide municipal service transferable among municipalities; D — Municipal bonds were issued by Ahmedabad in 1998
Property tax is the main own tax, the unified system is correctly defined, and Ahmedabad's 1998 issue was India's first municipal bond without a state guarantee. Octroi has been abolished, and remaining local indirect taxes were subsumed in the GST.The Smart Cities Mission implements projects in each selected city through:
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Answer: C — A special purpose vehicle incorporated as a company
Each Smart City set up an SPV under the Companies Act to plan and execute projects — the feature critics say bypasses the elected municipal council.The 73rd Amendment came into force on 24 April 1993. What is that day now observed as?
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Answer: B — National Panchayati Raj Day
24 April is National Panchayati Raj Day. National Voters' Day is 25 January, Civil Services Day 21 April and Constitution Day 26 November.Which of the following best describes the governance problem of metropolitan areas in India?
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Answer: D — Fragmentation among many municipal bodies, panchayats and state parastatals not accountable to elected councils
Metropolitan regions are split among multiple local bodies and powerful development authorities and utilities created by state law, while the Metropolitan Planning Committees meant to coordinate them exist in only a few areas.