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UPSC GS Paper – 2: Q.3 “The states in India seem reluctant to empower urban local bodies both functionally as well as financially.” Comment.

Gaurav Soni September 30, 2023 03:41 6236 0

Daily Answer Writing DAILY UPSC ANSWER WRITTING 2023 General Studies-II

Comment on the reluctance of Indian states to empower urban local bodies both functionally and financially. Analyze the implications of this reluctance for urban governance and development.

UPSC GS Paper – 2: Q.3 “The states in India seem reluctant to empower urban local bodies both functionally as well as financially.” Comment.

Q.3 “The states in India seem reluctant to empower urban local bodies both functionally as well as financially.” Comment.

How to approach the question

Introduction

●      Write about urban local bodies (ULBs) in India briefly

Body

●      Write how the states in India seem reluctant to empower urban local bodies functionally

●      Write how the states in India seem reluctant to empower urban local bodies financially

●      Write suitable way ahead in this regard

Conclusion

●      Give appropriate conclusion in this regard

Introduction

Urban Local Bodies (ULBs), encompassing Municipalities and Municipal Corporations, were envisaged as the administrative units responsible for ensuring proper governance in urban areas, deriving their mandate from the 74th Constitutional Amendment Act, 1992. This amendment aimed to strengthen local self-governance in cities and towns.

Body

Reluctance to Empower ULBs Functionally

  • Decentralization: Despite provisions in the 74th amendment, decentralization remains a tall order. States have been hesitant in delegating substantial powers to ULBs, therefore impeding grassroots democracy.
  • Manpower: ULBs face a dearth of skilled manpower across states, hampering functional efficacy. For instance, in many smaller cities and towns, there is a scarcity of qualified personnel to manage intricate urban planning needs, leading to mismanagement and chaos.
  • Bureaucratic Control: In numerous states, bureaucrats retain substantial control over ULBs. It fosters a lack of initiative and creativity in local governance solutions, evidenced in cities like Lucknow, where bureaucrat-led committees often override local decisions.
  • Role in City Planning: Although ULBs are supposed to spearhead city planning, they are often confined to marginal roles. In Bengaluru, for example, many vital city planning initiatives are undertaken by state agencies, bypassing the municipal corporation.
  • Lack of Autonomy in Service Delivery: Services such as water supply and waste management predominantly remain under state government control. In cities like Delhi, the multiplicity of authorities has resulted in fragmented governance, impacting service delivery adversely.
  • Limited Jurisdiction: Many ULBs have confined jurisdiction, not encapsulating several pivotal urban development sectors. In Hyderabad, for instance, several peri-urban areas are not under the ULB, resulting in unplanned and haphazard development.
  • Solid Waste Management: Taking the case of Mumbai, the ULB has limited control over the comprehensive management of solid waste. Due to this limitation, issues like the Deonar dumping ground crisis erupted, marking a significant failure in managing urban waste.

Reluctance to Empower ULBs Financially

  • Dependence on State and Central Grants: A significant number of ULBs are financially dependent on state and central grants. For instance, the municipalities majorly rely on funds from the state, thereby experiencing financial crunches in the absence of regular grants.
  • Financial Discrepancies: ULBs across states face financial discrepancies and mismanagement, which often lead to allegations of financial irregularities amounting to crores. Eg: Recent corruption case of the Municipal Corporation of Gurugram (2022).
  • States have not been setting up their State Finance Commissions: Very few states established separate state finance commission. Also, as per Finance commission report there is issues in functioning of this body as well.
  • Property Tax Reforms: Many states hesitate to hand over the reins of property tax reforms to ULBs, thereby limiting their financial autonomy. E.g.: in Karnataka, ULBs have limited control over determining the property tax rates.
  • Bond Markets: Despite the success stories like the Pune Municipal Corporation raising funds through bond markets, many states have not proactively encouraged other ULBs to tap into this financial resource, limiting their avenues for capital acquisition for developmental projects.
  • User Charges: States often show hesitancy in allowing ULBs to rationalize user charges for the services they provide. For instance, in many cities, the pricing for utilities like water and sewage has remained unchanged for years, affecting the revenue streams of ULBs negatively.
  • Public-Private Partnerships (PPP): While the PPP model has seen successful implementation in projects like the Hyderabad Metro, there is a broader reluctance in promoting ULBs to adopt this financial model for urban development, inhibiting innovative financial solutions.
  • GST Compensation: The ongoing tussles over GST compensation have added financial strain to ULBs. Post-GST implementation, many ULBs faced a reduction in their revenue as their share of taxes got significantly affected, imposing a dire need for compensation to maintain financial health.

Way Ahead

  • Strengthening Institutional Capacity: Initiatives could include establishing learning and development centres with a focus on urban governance, fostering collaboration with international urban development organizations to learn and incorporate best practices globally.
  • Fiscal Autonomy: Introduce legislative amendments allowing ULBs to identify and leverage new avenues for revenue generation, such as implementing localized environmental taxes or encouraging local entrepreneurial ventures through favourable tax regimes.
  • Enhance revenue collection: Urban local bodies can focus on improving tax collection efficiency and expanding the tax base. This can be achieved through better tax administration, leveraging technology for tax assessment and collection, and implementing effective property tax reforms
  • Public Participation: To foster a more inclusive governance model, public participation should be encouraged through innovative platforms such as mobile applications where locals can provide feedback and suggestions, or even partake in community budgeting.
  • Explore innovative financing mechanisms: Urban local bodies can explore innovative financing mechanisms such as municipal bonds, impact bonds, and land value capture to raise funds for infrastructure projects
  • Implement user charges: Introducing user charges for services such as water supply, solid waste management, parking, etc., can help generate revenue to cover operational costs and invest in infrastructure development.
  • Partnerships with Academic Institutions: This could involve setting up think tanks or research cells that focus on urban planning and development, offering fresh and academically sound perspectives for urban governance, thereby encouraging evidence-based policymaking.
  • Technology Integration: Initiatives could range from developing AI-based systems to manage utilities more efficiently to utilizing blockchain for ensuring transparency in tender processes and contracts, thus heralding a new age of technological governance.
  • Public-Private Partnerships: Creating a facilitative environment for public-private partnerships should be a priority. ULBs could set up specialized cells to foster and manage these partnerships, encouraging innovation and efficiency in urban development projects.

Conclusion

The vision of decentralized urban governance, as outlined in the 74th Constitutional Amendment Act, remains partially fulfilled due to the states’ reluctance to transfer both functional and financial powers to ULBs fully. Addressing this gap is crucial to foster self-reliant, efficient, and responsive urban local bodies, paving the way for sustainable and inclusive urban development in India.

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