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Introduction

The 2024 CAG audit raised concerns that Urban Local Bodies (ULBs), though constitutionally empowered under the 74th Amendment, lack real autonomy. The “3 Fs”—Functions, Functionaries, and Finances remain largely unimplemented. This failure has weakened urban governance and worsened India’s city-level crises.

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Role of 3Fs in Urban Governance

• Functions: The 74th Amendment devolved 18 functions under the 12th Schedule to empower ULBs for urban planning, land use regulation, and public service delivery.
  Eg: Functions include sanitation, solid waste management, and slum improvement core responsibilities meant to enhance city livability.
• Functionaries: ULBs require autonomy to recruit and manage personnel essential for executing devolved functions efficiently.
• Finances: Adequate financial devolution through State Finance Commissions (SFCs) and local taxation powers ensures fiscal independence.
  Eg: Property tax collection and rate-setting were intended as local revenue sources for sustainable funding.
• Institutional Framework: Democratic and planning institutions like State Election Commissions (SECs), District Planning Committees (DPCs), and Metropolitan Planning Committees (MPCs) are crucial to coordinated, participatory urban governance.
  Eg: SECs ensure regular municipal elections, strengthening local accountability.
• Integrated Governance: The 3Fs collectively aim to make ULBs self-reliant, accountable, and responsive to local needs, turning cities into engines of growth.

How Non-Implementation of 3Fs Has Crippled Urban Governance

• Limited Autonomy in Functions: Most ULBs control only 4 of 18 devolved functions, with parastatals and state departments executing key urban services.
• Weak Human Resource Capacity: State-controlled recruitment restricts staff strength, leaving many posts vacant.
  Eg: Shimla Municipal Corporation required 720 personnel but was sanctioned only 20 new posts; one-third of posts remain vacant nationwide.
• Fiscal Dependency: Delay in SFC constitution and partial fund transfers have caused severe revenue shortages.
  Eg: Shortfall of ₹1,606 crore across 15 states and an average expenditure–revenue gap of 42%.
• Democratic Deficit: Lack of elected councils and delayed municipal elections erode public accountability.
  Eg: 61% of 2,625 ULBs in 17 states lacked elected councils; only five states held direct mayoral elections.
• Planning Paralysis: Dysfunctional DPCs and MPCs prevent integrated regional development.
  Eg: Only 10 states constituted DPCs, and just 3 prepared annual district plans; only 3 of 9 mandated states formed MPCs.

Way Forward to Make Urban Governance Better

• Full Devolution of 3Fs: States must transfer all 18 functions, give ULBs control over personnel, and empower them financially.
• Strengthen Democratic Institutions: SECs must ensure timely elections and reduce state interference in ward delimitation.
  Operationalize DPCs and MPCs: Mandate coordinated urban–regional planning through active planning committees.
  Eg: Functional MPCs can integrate urban development with surrounding regions for balanced growth.
• Empower Human Resources: Grant ULBs autonomy in recruitment and skill development to ensure adequate staffing.
  Eg: Independent staff assessment mechanisms can prevent vacancies and ensure service efficiency.
• Ensure Fiscal Transparency: Institutionalize timely SFC constitution and implementation, linking grants to performance outcomes.

Conclusion

The urban crisis stems from disempowered local bodies, not mere inefficiency. Genuine devolution of the 3Fs is essential for accountable, well-planned, and financially stable cities. Only then can ULBs fulfil their constitutional mandate of effective self-governance.

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