Soumen Bagchi

REPORTS have been in the air of a Constitutional Amendment to delegate more powers to the civic bodies. In his address at the inaugural session of the World Mayors' Conference, the Union Minister of Parliamentary Affairs and Urban Development, Ghulam Nabi Azad, said: "Through the 74th Amendment in 1992, the Centre added a three-tier system to the country's federal polity. It was aimed at strengthening the municipal administration to have the institutional capability to deal with problems of urbanisation and urban population."

The 74th Constitution Amendment did not meet expectations despite being considered a historical development in urban governance.

It merely succeeded in ensuring Constitutional status to municipal bodies by checking the tendency of the State governments to supersede them, and not delegate too much power and authority to them.

74th Constitutional Amendment

Today, the municipal bodies are mere agents of the State government with considerable responsibilitythrust on them by the 74th Amendment but with little financial powers to execute them.

In fact, the 74th Amendment has partially, if not fully, contributed to the deterioration of basic services in the urban areas. This is largely due to the devolution of responsibilities to municipal bodies and, therefore, reduced focus by the State governments on basic urban services. Several analyses have revealed a decline in state funding of basic urban services.

However, there has not been compensatory devolution of financial powers to municipal bodies to execute these functions. Thus a situation has arisen where "everybody's responsibility has turned out to be nobody's responsibility".

A Constitutional Amendment to truly empower the municipal bodies is overdue. The Union Minister has rightly pointed out that the earlier Constitutional Amendment had not been successful, as many States had refused to part with their power.

As K. C. Shivaramakrishnan, former Secretary to the Government, Urban Affairs, in his book, Power to the People, points out, devolution of power to the lower tiers is often seen as a threat to the State-level politicians rather than a process of political pluralism.

Empowering the local bodies should not remain limited to political empowerment as it does not make much sense without financial empowerment. Keeping in view the continuing resource constraints with the municipal bodies, the objective of better services in the urban areas was least satisfied.

Municipal Revenue and State Finance Commissions

The municipal bodies have very little source of revenue at their disposal. Octroi has been abolished by most States, while property tax is constrained by several political and administrative factors.

Despite significant contribution by the urban areas to GDP, the municipal bodies have not benefited. There is no doubt that the provision of the mandatory constitution of State Finance Commissions every five years, in Article 243Y of the 73rd Constitutional Amendment, and referred to in Article 243I of the 74th Constitution Amendment, was a welcome measure.

However, the purpose was half defeated by bringing the formalities in this regard within the jurisdiction of the State government and not the Central Finance Commission.

Measures are under way in some of the States to constitute a State Finance Commission through a separate statute.

The Central Finance Commission is constituted every five years as per the Finance Commission (Miscellaneous Provisions) Act 1951. It provides for qualification for appointment, manner of selection of the members, term of office and eligibility for reappointment, conditions of service and salaries and allowances and procedures and powers of the Commission.

However, no such separate statute governs the constitution of the State Finance Commission. As a result, it is not uncommon for State Secretaries to be part of the State Finance Commissions.

In such instances, one can hardly expect unbiased recommendations for the betterment of the finances of municipal bodies.

It is of most of utmost urgency that the financial powers are devolved to urban local bodies, keeping in view the deterioration of urban basic services.

However, a word of caution: Are the local bodies capable of taking on the responsibilities that would devolve on them? It should not lead to mismanagement and misappropriation of public funds. News of funds devolved to the rural local bodies going unaccounted is not uncommon.

(The author is an Advisor to USAID Reform Project, Bangalore.)

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