Answer: 

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.

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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.

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.