The BAPS, Self Learning Materials follows the UGC prescribed State Model

Syllabus under Choice Based Credit System (CBCS). This course material is
designed and developed by Indira Gandhi National Open University (IGNOU),
New Delhi and K.K Handiqui Open University.
 Bachelor of Arts
POLITICAL SCIENCES (BAPS)

BAPS-9
Public Policy and Administration in India

Block-2
DECENTRALIZATION

UNIT-4 DECENTRALIZATION: MEANING,

SIGNIFICANCE, TYPES, AND APPROACHES TO
DECENTRALIZATION
UNIT-5 LOCAL SELF GOVERNANCE: RURAL

UNIT-6 LOCAL SELF GOVERNANCE: URBAN

UNIT-4 DECENTRALIZATION: MEANING,
SIGNIFICANCE, TYPES, AND APPROACHES
TO DECENTRALIZATION

Structure
4.1 Objective
4.2 Introduction
4.3 Decentralisation- Meaning and Dimensions
4.4 Concept of Decentralisation
4.5 Significance of Decentralization
4.6 Types of Decentralisation
4.6.1 Political
4.6.2 Administrative
4.6.3 Fiscal
4.6.4 Market
4.6.5 Environmental
4.7 Approaches to Decentralisation

4.8 Summary

4.9 Exercise

4.10 Reference

4.1 OBJECTIVE

After studying this Unit, you should be able to know:

 The meaning and concept of decentralization

 The significance of decentralization
 Different types of decentralization
 Approaches to decentralization

4.2 INTRODUCTION

There has been a wave of efforts globally to reform the State especially since the late
eighties and early nineties. The basic idea behind this was to bring the private players
and the market forces in the governance process along with the State thereby
lessening its burden as also making it more effective and accountable.
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Decentralisation is one such reform effort that was globally advocated. Accordingly,
many countries decentralised State powers to the sub-national governments and
shifted some of their powers to the periphery. India was no exception to this.

Decentralisation has become one of the most politically correct ideals for better
governance in today‘s time. It is seen as how the locus of power shifts from the
inefficient, corrupt, and rent-seeking central governments to more accountable,
responsive, and transparent local governments. It encourages greater political
participation and increases the responsiveness of the government institutions
ultimately improving the planning and implementation of the development schemes
and programs. In developing countries such as India, it is seen as a progressive
strategy to promote development by identifying the needs and preferences of the
people through their direct participation in governance especially at the grassroots
level.

Local governance through decentralised institutions is said to foster participation,

transparency, effective implementation of plans and programmes at the grassroots
level, harnessing the available human resources besides empowering the marginalised
sections of the society.

4.3 DECENTRALISATION- MEANING AND DIMENSIONS

Decentralisation is a system in which the basic activities are carried out at various
levels giving adequate scope for all the partners to participate in these activities.
Decentralisation involves a systematic distribution of powers and functions across
different political and economic agents in a society. Decentralisation has both
political and economic dimensions. Political decentralisation involves different levels
of government and distribution of powers and functions at various levels of
government such as national, state, and local levels.

Decentralisation is an economic system that implies decentralisation of various

economic activities concerned with production, distribution, and exchange. It implies
the organisation of production in production units of different sizes-small, medium,
and large- owned by a large group of people and distribution of products through
various channels. In a mixed economy plans for such a system are prepared at
national, state, and local levels to meet the local needs and enable the people to
participate in development activities. Planning and implementation of economic
activities are appropriately distributed at various levels. The empowerment of village
panchayat i.e. the village local self-government is an essential requirement for
building-up an effective decentralised politico-economic structure.

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4.4 CONCEPT OF DECENTRALISATION

We must be very clear about the meaning of decentralisation if we have to grapple

with its issues and concerns. Decentralisation has emerged as a prominent issue in the
literature of public administration and is regarded as one of the most important
politico-administrative innovations of this century. It has been and continues to be
advocated as an important component of policy packages to improve governance in
developing countries, especially in the context of disillusionment, which has set in on
account of central planning. The centralist regimes find themselves overburdened
with complex and widespread socio-economic problems for which they have no
answers, as the governments have sought to create more socially equitable patterns of
economic growth to meet the basic needs of the poor. In the case of India, efforts in
this direction have been made since independence. There have been strong voices in
favour of decentralisation and having the third tier of governance where local
decisions will be taken by the people.

The term decentralisation is understood differently by different individuals or groups.

It is essentially a mechanism through which power is transferred from the central
government to the lower levels of government or field organisations. Decentralisation
means the dispersal of authority among several individuals or units. Decentralisation
is not only a device for the delegation or dispersal of administrative authority, but it is
also a democratic method of devolution of authority.

Decentralisation refers to the physical location of facilities and the extent of dispersal
of authority throughout an organisation. Hence, it is an arrangement by which the
ultimate authority to command and the ultimate responsibility for results is localised
in units located in different parts of the country. It is argued that assigning of
functions and responsibilities, for their efficient and effective performance, to the
decentralised lower levels where they are allowed to decide many matters and a few
cases involving major policies or interpretations are referred to the higher levels of
the organisation is yielding results.

The concept of decentralisation, as it applies to India, presents a different approach to

the decentralisation of political and administrative powers. It was apparently intended
to conform to be the model of democratic decentralisation in which powers and funds
are transferred from higher-level institutions to elected bodies at the local level (Jayal,
2007). Having its mixed goals of democracy, decentralisation, and development, it
implies devolution of governmental powers and responsibilities, decentralisation of
political institutions, development of local leadership, and strengthening the efforts
for economic modernisation. It is the process whereby the government divests itself
completely of certain duties and responsibilities and devolves them on some other
authority (Mishra, 1989).

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To be precise, decentralisation is an ideological principle associated with objectives
of self-reliance, democratic decision making, popular participation in government,
and accountability of public officials to citizens. It is a prime mechanism through
which democracy becomes truly representative and responsive (Arora and Goyal,
1995). Decentralisation is a political decision, and its implementation, a reflection of
a country‘s political process. It is the dispersal of authority among the lower levels of
an organisation and its field offices. It, thus, creates a sense of responsibility in local
decision making agencies with a more or less independent existence and powers. It is
sharing the decision-making authority with lower levels in organisations, thereby
improving their efficiency, effectiveness, and responsiveness (Chakrabarty and
Chand, 2012).

4.5 SIGNIFICANCE OF DECENTRALIZATION

Decentralisation has been looked at as a singularly useful mode of administration to

deliver the public services from convenient local centers close to the clients‘ locality
and thus more responsive to local needs. The developing world has undergone some
form of decentralised governance in line to meet peoples‘ demands (Islam, 2007).
Bringing administration to the doorsteps of the citizens and establishing a direct
relationship between the citizens and the administration has been the driving force
behind decentralisation in most of the developing countries.

The urge for decentralisation has come from many sources. Firstly, it has been
prompted by the need to deliver basic public goods such as food, housing, and water
from local units of administration. Secondly, most people in developing countries live
in rural areas, which are away from the national capital located in distant urban areas.
The administration has to penetrate the rural areas and link these up with the nation as
a whole. Thirdly, in many countries, sociological diversities manifest themselves in
ethnic, linguistic, and religious differences. The administration needs to be
decentralised in response to regional diversities.

Fourthly, regional and local resources can be utilised for area development purposes,
only if the administration would move out to the regions and localities.
Decentralisation, therefore, facilitates local planning and development with the help
of local responses leading to better development outcomes. Fifthly, decentralisation
has its value in political and administrative terms. Politically, local participation in
development activities, with intensive response paves the way for the meaningful
articulation of local demands.

Planning thus becomes much more realistic and receives ready political support.
From the administrative point of view, the local capability to govern local areas
increases through sustained participation in local decision making. Decentralisation is
expected to release local energies and enlist local support for development activities.
In the process, the local community can steadily attain political and administrative
4
maturity. Finally, it is needed to institutionalise the participation of citizens in
development planning by creating alternative means of decision making.

In the words of Rajni Kothari (1988) ―decentralisation is an alternative system of

governance based on a people-centered approach to sorting out local-level problems.
In the entire process, people are located at the center of power so that they become
the basic engine of the development process and not, as hitherto, merely its
beneficiaries‖

4.6 TYPES OF DECENTRALISATION

Four different types of decentralisation can be identified, viz., administrative,

functional, political and geographical. Administrative decentralisation refers to the
decentralisation of authority to the lower officials in the administrative hierarchy of
organisations. It may also mean decentralisation powers or functions to the
subordinate units. Functional decentralisation implies that the functions are
decentralised to the specialised units or departments like education or health. Political
decentralisation involves that the political powers and functions concentrated in the
hands of higher-level political organs are decentralised to lower-level political organs.
We are all aware that Panchayati Raj agencies are units of decentralisation wherein
political powers of decision making are decentralised from state governments to
panchayats, Samiti and Zilla Parishad. Finally, in geographical decentralisation, the
powers, and functions of headquarters decentralised to the field departments of the
state government, which are further decentralised to their field officers at the regional
and district levels. This facilitates quick decision-making keeping in view the local
requirements.

Government decentralization has both political and administrative aspects. Its

decentralization may be territorial, moving power from a central to other localities,
and it may be functional, moving decision-making from the top administrator of any
branch of government to lower-level officials, or divesting of the function entirely
through privatization. It has been called the "new public management" which has
been described as decentralization, management by objectives, contracting out, and
competition within government and consumer orientation.

4.6.1 Political
Political decentralization signifies a reduction in the authority of national
governments over policymaking. This process is accomplished by the institution of
reforms that either delegate a certain degree of meaningful decision-making
autonomy to subnational tiers of government, or grant citizens the right to elect
lower-level officials, like local or regional representatives. Depending on the country,
this may require constitutional or statutory reforms, the development of new political
parties, increased power for legislatures, the creation of local political units, and
encouragement of advocacy groups.
5
A national government may decide to decentralize its authority and responsibilities
for a variety of reasons. Decentralization reforms may occur for administrative
reasons when government officials decide that certain responsibilities and decisions
would be handled best at the regional or local level. In democracies,
traditionally conservative parties include political decentralization as a directive in
their platforms because rightist parties tend to advocate for a decrease in the role of
the central government. There is also strong evidence to support the idea that
government stability increases the probability of political decentralization since
instability brought on by gridlock between opposing parties in legislatures often
impedes a government's overall ability to enact sweeping reforms.

The rise of regional ethnic parties in the national politics of parliamentary

democracies is also heavily associated with the implementation of decentralization
reforms. Ethnic parties may endeavor to transfer more autonomy to their respective
regions, and as a partisan strategy, ruling parties within the central government may
cooperate by establishing regional assemblies to curb the rise of ethnic parties in
national elections. This phenomenon famously occurred in 1999, when the United
Kingdom's Labour Party appealed to Scottish constituents by creating a semi-
autonomous Scottish Parliament to neutralize the threat from the increasingly
popular Scottish National Party at the national level.

In addition to increasing the administrative efficacy of government and endowing

citizens with more power, there are many projected advantages to political
decentralization. Individuals who take advantage of their right to elect local and
regional authorities have been shown to have more positive attitudes toward politics,
and increased opportunities for civic decision-making through participatory
democracy mechanisms like public consultations and participatory budgeting are
believed to help legitimize government institutions in the eyes of marginalized
groups. Moreover, political decentralization is perceived as a valid means of
protecting marginalized communities at a local level from the detrimental aspects of
development and globalization driven by the state, as the degradation of local
customs, codes, and beliefs. In his 2013 book, Democracy and Political
Ignorance, George Mason University law professor Ilya Somin argued that political
decentralization in a federal democracy confronts the widespread issue of political
ignorance by allowing citizens to engage in foot voting, or moving to other
jurisdictions with more favorable laws. He cites the mass migration of over one
million southern-born African Americans to the North or the West to evade
discriminatory Jim Crow laws in the late 19th century and early 20th century.

The European Union follows the principle of subsidiary, which holds that decision-
making should be made by the most local competent authority. The EU should decide
only on enumerated issues that a local or member state authority cannot address them.
Furthermore, enforcement is exclusively the domain of member states. In Finland,

6
the Centre Party explicitly supports decentralization. For example, government
departments have been moved from the capital Helsinki to the provinces. The Centre
supports substantial subsidies that limit potential economic and political
centralization to Helsinki.
Political decentralization does not come without its drawbacks. A study by Fan
concludes that there is an increase in corruption and rent-seeking when there are more
vertical tiers in the government, as well as when there are higher levels of subnational
government employment. Other studies warn of high-level politicians that may
intentionally deprive regional and local authorities of power and resources when
conflicts arise. To combat these negative forces, experts believe that political
decentralization should be supplemented with other conflict management mechanisms
like power-sharing, particularly in regions with ethnic tensions.
4.6.2 Administrative

Four major forms of administrative decentralization have been described.

 Deconcentration, the weakest form of decentralization, shifts responsibility for

decision-making, finance, and implementation of certain public functions from
officials of central governments to those in existing districts or, if necessary, new
ones under the direct control of the central government.
 Delegation passes down responsibility for decision-making, finance, and
implementation. It involves the creation of public-private enterprises or
corporations, or of "authorities", special projects or service districts. All of them
will have a great deal of decision-making discretion and they may be exempt
from civil service requirements and may be permitted to charge users for services.
 Devolution transfers responsibility for decision-making, finance, and
implementation of certain public functions to the sub-national level, such as a
regional, local, or state government.
 Divestment, also called privatization, may mean merely contracting out services
to private companies. Or it may mean relinquishing all responsibility for decision-
making, finance, and implementation of certain public functions. Facilities will be
sold off, workers transferred or fired, and private companies or not-for-profit
organizations allowed to provide the services. Many of these functions originally
were done by private individuals, companies, or associations and later taken over
by the government, either directly, or by regulating out of business entities that
competed with newly created government programs.
4.6.3 Fiscal
Fiscal decentralization means decentralizing revenue raising and/or expenditure of
money to a lower level of government while maintaining financial responsibility.
While this process usually is called fiscal federalism it may be relevant to unitary,
federal and confederal governments. Fiscal federalism also concerns the "vertical

7
imbalances" where the central government gives too much or too little money to the
lower levels. It actually can be a way of increasing central government control of
lower levels of government, if it is not linked to other kinds of responsibilities and
authority.
Fiscal decentralization can be achieved through user fees, user participation through
monetary or labor contributions, expansion of local property or sales taxes,
intergovernmental transfers of central government tax monies to local governments
through transfer payments or grants, and authorization of municipal borrowing with
national government loan guarantees. Transfers of money may be given conditionally
with instructions or unconditionally without them.
4.6.4 Market
Market decentralization can be done through the privatization of public-owned
functions and businesses, as described briefly above. But it also is done
through deregulation, the abolition of restrictions on businesses competing with
government services, for example, postal services, schools, garbage collection. Even
as private companies and corporations have worked to have such services contracted
out to or privatized by them, others have worked to have these turned over to non-
profit organizations or associations,
Since the 1970s there has been deregulation of some industries, like banking,
trucking, airlines, and telecommunications which resulted generally in more
competition and lower prices. According to Cato Institute, an American libertarian
think-tank, some industries' deregulation of aspects of the industry were offset by
more ambitious regulations elsewhere that hurt consumers, the electricity industry
being a prime example. For example, in banking, Cato Institute believes some
deregulation allowed banks to compete across state lines, increasing consumer choice,
while an actual increase in regulators and regulations forced banks to do business the
way central government regulators commanded, including making loans to
individuals incapable of repaying them, leading eventually to the financial crisis of
2007–2008.
One example of economic decentralization, which is based on a libertarian socialist
model, is decentralized economic planning. Decentralized planning is a type of
economic system in which decision-making is distributed amongst various economic
agents or localized within production agents. An example of this method in practice is
in Kerala, India which started in 1996 as, The People's Planning in Kerala.
Some argue that government standardisation in areas from commodity market,
inspection and testing procurement bidding, Building codes, professional and
vocational education, trade certification, safety, etc. are necessary. Emmanuelle
Auriol and Michel Benaim write about the "comparative benefits" of decentralization
versus government regulation in the setting of standards. They find that while there
may be a need for public regulation if public safety is at stake, private creation of

8
standards usually is better because "regulators or 'experts' might misrepresent
consumers' tastes and needs." As long as companies are averse to incompatible
standards, standards will be created that satisfy the needs of a modern economy.
4.6.5 Environmental
Central governments themselves may own large tracts of land and control the forest,
water, mineral, wildlife, and other resources they contain. They may manage them
through government operations or leasing them to private businesses, or they may
neglect them to be exploited by individuals or groups who defy non-enforced laws
against exploitation. It also may control most private land through land-use, zoning,
environmental and other regulations. Selling off or leasing lands can be profitable for
governments willing to relinquish control, but such programs can face public scrutiny
because of fear of a loss of heritage or environmental damage. Devolution of control
to regional or local governments is an effective way of dealing with these concerns.
Such decentralization has happened in India and other third world nations.

4.7 APPROACHES TO DECENTRALISATION

The different approaches to the concept have been clearly and profoundly presented
by Fesler. Following his classification, the approaches can be grouped into four
categories: the doctrinal, the political, the administrative, and the dual role.

The doctrinal approach seeks to transform decentralisation as an end in itself through

a process of 'romantic idealisation'. The Gandhian concept of the 'concentric circle' of
power distribution and the idealisation of the village community in Panchayati Raj
have reduced decentralisation almost to dogma and as an article of faith. Instead of
treating decentralisation as a means to the achievement of some end-values, such
idealisation tends to elevate it to the status of a hardened doctrine.

The political approach underscores the essentially political character of

decentralisation. Initiatives to decentralise, and willingness to pass on powers and
functions to decentralise units, and to allow these units to operate within a framework
of autonomy, are politically determined. The creation of field units of government,
away from central headquarters, exemplifies deconcentration. Decentralisation in the
shape of devolution to local self-governing bodies marks an attempt to set up
autonomous governments at the level of the locality. Field units of government like
district administration are the long arms of the central (state) government. To create
and maintain local government is thus a major political commitment. In the absence
of such commitment, devolution to subnational governments, including self-
governing bodies, will remain more in law than in practice. This leads to what Fesler
has called 'illusory decentralisation'. Both Panchayati Raj and the municipal
government in India represent to a considerable extent this sort of facade devolution.

The administrative approach to decentralisation is motivated by the efficiency

criterion. Enhancement of administrative rationality becomes necessary. When field
9
administrative units are set up through a process of deconcentration, the measure is
considered appropriate for field-level decision-making and prompt problem-solving.
In this process, administrative units might come up at many levels between the
locality and the central (state) headquarters. With more and more demand for
specialised functions, the multiplicity of functional departments would appear at the
field level. The administrative situation gradually presents a picture of polarisation
between general area-based administrative demands and specific function-centered
claims of particular functional departments. Currently, the district administration in
India is faced with this problem of area-function duality. Decentralisation in
administrative terms may not therefore always guarantee 'clarity of authority and
orderliness of operations'. To promote such operational principles, conscious attempts
are needed to readjust from time to time the conflicting claims of area and functions
in deconcentrated field administration.

Finally, the dual role approach, as Fesler puts it, is a kind of rehearsal of the area
function dichotomy in a new setting. Decentralisation is placed within a larger
context of development and change, as distinguished from the maintenance of the
status quo. Conceived in administrative terms, the dual role approach seeks to
highlight the conflict in field administration between tradition and change. Most field
administrative systems were evolved in an earlier era mainly to maintain the
established order, to collect revenue, and to keep things from going wrong. Almost all
the developing countries that have inherited the colonial field system are seeking to
bring about speedy social and economic change. As a consequence, there has been a
radical change in the functions of field administration. To quote Fesler, "The intent is
to change established ways of doing things to carry economic and social.
Development forward rapidly. This contrasts with the status quo orientation of a field
system geared to the maintenance of the established order and may conflict with the
personal orientation of field generalists so chosen and trained as to identify
themselves with the classes, families, and other groups who constitute the
'establishment'." Resolution of conflict between two different orientations in field
administration calls for adaptation of decentralisation to changing circumstances. The
theme is not unfamiliar to Indian administration in general and to the district
administration in particular.

4.8 SUMMARY

The process of decentralising powers to the lower levels of governance had been
going on since the pre-Independence days. The motives, assumptions and political-
administrative compulsions have, however, differed from age to age. Since
Independence, India has been experimenting with decentralisation and development.
The establishment of Panchayati Raj institutions, on the recommendations of the
Balwant Rai Mehta Committee (1957), was a landmark in the history of decentralised
development. For a variety of reasons, the Panchayati Raj institutions could not play

10
the desired role and in most states, the institutions languished for want of political
production and administrative and financial support. Reports of commissions and
committees and many research studies have pointed out the danger of continued
neglect of the grassroots institutions, both for the health of Indian democracy and for
bringing about meaningful local development with active popular participation. The
Constitutional amendments - 73rd (for Panchayati Raj) and 74th (for Municipal
Bodies) - have since been enacted, granting Constitutional status to local government.
The 'decentralisation debate' has assumed considerable significance in recent times
for various reasons as discussed in this Unit. There is a need to deepen democracy.
People at the grassroots level need to be "empowered". And, above all, participatory
development is possible and becomes a reality only with decentralisation. In this Unit,
all-attempt was made to discuss the approaches, types of decentralisation, the
evolution of the system of decentralisation in India. It also highlighted the recent
trends and functioning of institutions of decentralisation in India and factors impeding
decentralisation.

4.9 EXERCISE

1. Explain the meaning and dimensions of decentralization.

2. Write a note on the concept of decentralization.
3. What are the significances of decentralization?
4. Explain the different types of decentralization.
5. Write notes on the approaches of decentralization.

4.10 REFERENCE

Avasthi and Maheshwari S.R., 1985, Public Administration (141h rev. ed.); Lakshmi
Narain Agarwal; Agra.

Bureaucracy and Development Administration, 1978, Centre for Policy Research,

New Delhi.

Jain L.C., Krishnamurthy B.V., and Tripathi P.M., 1985, Grass Without Roots: Rural
Development Under Government Auspicies, Sage Publications, New Delhi.
Maheshwari S.R., 1989, Indian Administration (4Ih rev, ed. and updated), Orient
Longman Limited, New Delhi.

Satyanarayana P. (ed.), 1990, Towards New Panchayati Raj, Uppal Publishing House,
New Delhi.

Indian Journal of Public Administration - Special Number on Decentralisation, July-

September 1978.

11
UNIT-5 LOCAL SELF GOVERNANCE: RURAL

Structure
5.1 Objectives
5.2 Introductions
5.3 Historical Background
5.4 Historical Evolution of Panchayati Raj Institutions
5.4.1 Balwant Rai Mehta Committee
5.4.2 Ashok Mehta Committee
5.5 73rd Constitutional Amendment
5.6 Structure Of Panchayati Raj System
5.6.1 Gram Panchayat
5.6.1.1 Function of Gram Panchayat
5.6.2 Panchayat Samiti
5.6.2.1 Functions of Panchayat Samiti
5.6.3 Zilla Parishad
5.6.3.1 Functions of Zilla Parishad
5.7 Summary
5.8 Exercise
5.9 Reference
5.1 OBJECTIVE

After studying this Unit, you should be able to know:

 Historical background of Panchayati raj

 Evolution of Panchayati raj
 About Balwant Rai Mehta and Ashok Mehta Committee
 73rd amendment act and Panchayati raj institutions

5.2 INTRODUCTION

Local self-governance implies the creation of local government institutions at the

village, block, and district levels. These bodies play a vital role in rural administration
in the present age when more and more governments are carrying the banner of the
welfare state. The powers entrusted to these bodies make a State democratic or
undemocratic. The units of local self-government in rural areas are village Panchayat,
12
Panchayat Samitis, and Zila Parishads. The village Panchayats have been linked to
the Panchyat Samitis at the block level and the Zilla Parishad at the district level. No
doubt the scheme of Panchayati Raj emerged after the acceptance of the
recommendations on Democratic Decentralisation of the Balwant Rai Mehta Study
Team. A new system of local self Government has been introduced which seeks to
tackle the problems at the grassroots level, building up democracy and mobilize the
entire potential manpower resources of the country for economic and social progress.
Panchayati Raj makes democracy a reality—PR aims at making democracy real by
bringing the millions into the functioning of democracy. It is a grassroots democracy
wherein the individual family in the remotest village is linked up with the democratic
process. The introduction of PR is the most appropriate step for building up
democratic traditions in the country. India is committed to the democratic form of
Government democracy not only a form of government but a way of life. Democracy
cannot be built up either from Delhi or from a State Capital. It can be built up only
when all people are directly or indirectly involved in it. It stands for local
government, local leadership, local competency, local initiative, and participation of
local people in all the activities (Moorthy). In this unit, we will be discussing the
organisational structure of rural local bodies and understand the structure of the
Panchayati Raj System at the national, state, district, block, and village levels.

5.3 HISTORICAL BACKGROUND

In India, the system of village Panchayat is very old. In ancient India, the village
formed the basic unit of social and economic life in India. During the foreign rule, the
inhabitants of our country were denied all the benefits of civilized life. This tendency
has been in its naked form since the onset of the Industrial Revolution in England.
The 18th century Revolution in England bought far-reaching changes in Great Britain
in different field‗s viz., agriculture, transport, and Industry. These changes in Britain
subsequently affected the economy of the country. The village suffered the most. The
village suffered the most. The village organization as a self-sufficient unit which was
the characteristic feature of the old Indian economy disappeared. Our handicrafts and
manufactured were ruined to provide a push to British Industries. In due course of
time, agriculture became more and more an uneconomic population.

Britishers made all efforts to ruin our culture, arts and crafts, and foreign trade. The
villagers became conservative and shrewd. In this way, the condition of the rural
masses from physical-economic, social, educational, and cultural points of view
became gradually very unsatisfactory and beyond the limit of tolerance. There were
the victims of mental lethargy. Thus, in the course of a few decades a developed and
advanced country due to the imposition of certain checks, hindrances, and obstacles 3
on the smooth path of developing process in our country, lagged far behind many
other countries was put in the category of underdeveloped countries. The several
causes led to the village Panchayats during the British rule in our country. It is

13
stressed and claimed that India had a self-governing system at the base level during
the ancient time in the form of village Panchayats. The village organization then
functioned as a center of Community life independent of the state. It is, therefore,
argued that the British rule dismantled our self-governing system. Planning in a
welfare State is a social process in which every citizen has to participate says
Planning Commission. India is a land of villages and we have a lack of villages in the
country. Gandhiji used to say that India consists of villages and ultimately our
progress will be regulated by the advancement that the village people can show.

Gandhiji drew the picture of free India‗s political structure in the words, Indian
Independence must begin at the bottom. Every village should be a republic or a
Panchayat having full powers the greater the power of Panchayats, the better for the
people. (Harijan, 1946). Swaraj signified to him the vesting of the ultimate authority
in the peasant and the laborer. True democracy cannot be worked out by twenty men
sitting at the center. It has to be worked from below by the people of every village.
(Harijan, 18th Jan 1948).

The Report on the organization of Local –self Institutions (Rural and Urban) about
Planned social and economic development in India emphasized in 1951, ―A
democratic Government at the center can never function satisfactorily unless it is
supported by the democratic organization of local administration.‖ Democratic
government will never be secure unless it is so supported. Our leaders were careful,
cautious, and watchful and they realized that we may also be in\ danger of losing our
democratic government unless we take steps to afford security to our system of
Parliamentary Democracy by establishing a properly organized scheme of local-self
government.

5.4 HISTORICAL EVOLUTION OF PANCHAYATI RAJ INSTITUTIONS

Soon after achieving independence, the Planning Commission came into existence in
1950 and began to plan for large-scale economic and social progress. It was by then
commonly understood that actual all-around development could not be achieved until
it is backed by the development of rural areas. The Planning Commission, therefore,
thought of shaping the village development program, to attack the five giants of
hunger, poverty, disease, squalor, and ignorance through a self-help program of
Community Development in 1952. These steps were designed to secure the
involvement of rural people in the process of rural development.

The inadequate success registered by these necessitated the need for reforms. In 1954,
the Government of India established the Balwant Rai Mehta Committee for
suggesting reforms in this regard, which submitted its report in 1957. Among others,
the most important contribution of the report pertains to ‗democratic decentralisation‘
and the proposed politico-administrative system at the grassroots. The report
14
emphatically stated that ―so long as we do not discover or create a representative and
democratic institution which will supply the local interest, supervision, and care
necessary to ensure that expenditure of money upon local objects conforms with the
needs and wishes of the locality, invest it with adequate power and assign to it
appropriate finances, we will never be able to evoke local interest and excite local
initiative in the field of development.‖

Balwant Rai Mehta is widely known as the ‗Architect of Panchayati Raj‘ in India and
his birthday (19th February) is observed as Panchayat Day

5.4.1 Balwant Rai Mehta Committee

The report recommended the creation of a three-tier system of democratic

decentralisation (which came to be known as the Panchayati Raj system), namely,
Gram Panchayat at the village level, Panchayat Samiti at the block level, and Zilla
Parishad at the district level. It is recommended that the entire development
administration should be handed over to these bodies. The Committee gave details of
organisation, functions, resources, and relations of one with the other.

In brief, the village Panchayat should be elected, with provision for the co-option of
two women members and one member each from the SC and ST communities.
Panchayat Samiti should be constituted for the area included in a block by indirect
election, that is, members of the Panchayats within the block area will elect members
of the Panchayat Samiti from amongst themselves. The Committee emphasised the
importance of a block and said, ―the block offers an area large enough for functions
which the village Panchayat cannot perform and yet small enough to attract the
interest and service of the residents.‖ The third tier was to be occupied by the Zilla
Parishad whose main function would be to achieve necessary coordination between
the Panchayat Samitis within the district. It will consist of presidents of Panchayat
Samitis, Members of Parliament and State Legislatures and district level officers of
the development departments. The Zilla Parishad would be an advisory-cum-
supervisory body, having no executive functions.

The Committee gave a broad blueprint for democratic decentralisation, and it was left
to each State to work out the structure and functional details best suited to its local
conditions. Consequently, different patterns of Panchayati Raj emerged in different
states. These recommendations were considered by the National Development
Council (NDC) in January 1958, and democratic decentralisation became a part of the
national agenda.

Panchayati Raj institutions did not take off successfully. In the 1960s, PRIs was
portrayed as a ‗God that failed‘. One of the main reasons for the failure was sabotage
by state politicians who were not enthusiastic about devolving powers to the district
level and below. State politicians were apprehensive that PRIs with real powers may
pose a threat to their power and influence. The lack of resources, absence of
15
coordination, dependence on district development staff, lack of delegation of effective
authority, domination by the upper castes, and better-off sections of society had
rendered the PRIs ineffective and purposeless as institutions of decentralisation and
development.

By the middle of the 1970‘s governments, both at the center and in the states had
become indifferent to PRI‘s, which had become defunct. Elections to these
institutions had not been held in most places, and the sitting councils were either
dissolved or suspended.

The mid-seventies marked a discernible shift of opinion in favor of conceding larger

political space to local communities in the governing process. Local self-governing
institutions were expected to play an important role in reordering societal power
equations. As the Janata Party Government had pledged its commitment to the
Gandhian philosophy, the overall atmosphere seemed to be conducive for the
resurgence of the Panchayati Raj Institutions.

Another plausible reason seems to be the fact that by the late 1970s the Green
Revolution had become a decade old and it had given birth to a rich peasant class who
were fully aware of the importance of direct access to decentralised government
machinery, more particularly it's the delivery system. The central place of PRIs was
thus restored.

5.4.2 Ashok Mehta Committee

In the late seventies, another Committee chaired by Ashok Mehta was given the task
of revisiting the institutions of Panchayats and making suitable recommendations to
renew the Gandhian vision of ‗village republics‘. The Ashok Mehta Committee report
refused to accept the view that Panchayati Raj was a ‗failed God‘. The Committee
credited these institutions with starting the process of democratic decentralisation and
making the citizens more conscious of their rights than before. Among other positive
fallouts was the bridging of the gap between the bureaucratic elite and the people.

The Ashok Mehta Committee was innovative in many ways. It recognised the
importance of participation of political parties in Panchayati Raj elections to make
them more accountable and to link Panchayati Raj institutions with the national
political process. The Committee also proposed reservation of seats for both women
and weaker sections of society.

The decline of the Janata Government created a hostile climate for the
implementation of the Ashok Mehta Committee report. Despite this, the Non-
Congress State Governments of Karnataka, Andhra Pradesh, and West Bengal took
concrete measures to reactivate the PRIs. In Karnataka, the PRIs that came into
existence incorporated most of the recommendations made by the Mehta report.

16
While Non-Congress State Governments were busy implementing the
recommendations of the Ashok Mehta Committee, the new Congress government at
the center appointed other commissions. C.H. Hanumantharao‘s working group of
1983 and G.V.K. Rao Committee report of 1985 emphasized the need for integration
of the Panchayati Raj system with development programs and administration. The
concept paper on Panchayati Raj prepared by the L. M. Singhvi Committee Report of
19863 suggested that Panchayati Raj institutions should be closely involved in the
planning and implementation of the rural development programs. Both the Singhvi
and the Ashok Mehta Committees recommended a constitutional basis for democratic
decentralisation.

5.5 73rd CONSTITUTIONAL AMENDMENT

The 73rd and 74th Amendments to the Constitution in 1992 bestowed constitutional
status on Panchayati Raj and Nagarpalika institutions. The main aim of the
Panchayati Raj system envisaged under the 73rd constitutional amendment is the
socio-economic development of rural India. Panchayati Raj has been designed to
encourage rural people to actively participate in governance, thereby inculcating a
habit of democratic living. It seeks to transform villages into self-governing and self-
sufficient units, and thus imbue a sense of self-confidence among the villagers. It
further acts as a system of education and training in the democratic process and
ensures that local needs and development are attained through local efforts.

Some of the fundamental principles of the Panchayati Raj system as envisaged in the
amendment are as follows:

 There should be a three-tier structure of local self-governing bodies at the

village level, the intermediate/block/taluka level, and the district level, with all
three bodies being organically linked.
 There should be a genuine transfer of power and responsibilities to them.
 Adequate resources should be transferred to these bodies to enable them to
discharge their responsibilities.
 All welfare and development schemes and programs at these levels should be
channeled through these bodies alone.
 These bodies being charged with various duties and functions, no higher body
should be allowed to do what a lower body can do.
 The three-tier system should be such that it facilitates further devolution and
dispersal of power and responsibility in the future.

The amendment added a new part IX to the Constitution consisting of 16 Articles and
the Eleventh Schedule. The Eleventh Schedule contains 29 subjects on which the
Panchayats have administrative control. We will now look at the relevant
constitutional provisions about different aspects of Panchayati Raj.

17
Structure of PRIs

Article 243A provides that the Gram Sabha may exercise such powers and perform
such functions at the village level as the State Legislature may by law provide. The
Gram Sabha is envisaged as the foundation of the Panchayati Raj system. The Gram
Sabha consists of all the residents of a village who are above 18 years of age and are
on the electoral rolls of the village.

Almost all the State Acts identify the functions of the Gram Sabha. The functions
include discussion on the annual statement of accounts, administration, and reports,
and selection of beneficiaries of anti-poverty programs. Drafting and implementation
of development plans have to be vetted and monitored by the Gram Sabha. The State
Acts of Haryana, Punjab, and Tamil Nadu gives the power of approval of the budget
to the Gram Sabha.

In the Panchayati Raj system, Gram Sabha is the only permanent unit. The tenure of a
Panchayat i.e. Mukhiya and other members is for 5 years, but the villagers do not
change! All the representatives in the PRIs are answerable and accountable to the
Gram Sabha. Further, under laws like the Panchayati Raj (Extension) Act (PESA),
Gram Sabha has been endowed with extensive powers to take decisions on all matters
affecting it directly and locally. The Gram Sabha elects the Gram Pradhan and other
members of the Gram Panchayat. Success or failure of the Panchayati Raj system
depends largely upon the strength of the Gram Sabha. We will discuss the role and
powers of the Gram Sabha in detail in the next unit of this block.

Article 243B envisages three tiers of elected Panchayats at the village level, the
intermediate level (also known as the Block or Taluka level), and finally at the district
level, and creates an organic linkage between the three. The constitution of
intermediate Panchayats is not mandatory and is dependent on the size of the
population in that state. In states having a population of fewer than twenty lakhs, the
State Government may decide not to constitute intermediate Panchayats.

The obligatory functions of the Gram Panchayat include the provision of safe
drinking water, maintenance of public wells, ponds, dispensaries, primary and
secondary schools, etc. Now they have also been assigned developmental functions
like minor irrigation schemes, rural electrification, cottage, and small industries, and
poverty alleviation programmes.

The Block level PRI institution is known by different names in different parts of the
country. For example, in Gujarat they are called Taluka Panchayat; in UP Kshetra
Samiti; and in MP Janapada Panchayat. The powers of the Panchayat Samiti include
the provision of an improved variety of seeds and fertilizers, maintenance of schools,
hospitals, roads, and implementing anti-poverty programs, and supervising the
functioning of the Gram Panchayat.

18
The Zilla Parishad is the apex body of the PRIs. It approves the budgets and
coordinates the activities of the Panchayat Samitis. It maintains educational
institutions, irrigation schemes, and undertakes programmes for the weaker sections.

Article 243C enunciates how Panchayats shall be constituted. The State Legislatures,
when identifying the territorial extents of various Panchayats within their States, as
far as may be practicable, shall ensure that all the Panchayats are similar in size.
Further, the ratio between the number of seats and the population of the Panchayat
area should be maintained as a constant. The experience of the last 15 years shows
that Panchayats covering a small area not only function better but are also more
financially viable. At the Gram Panchayat level, all the seats in a Panchayat shall be
filled in by direct election from the territorial jurisdiction of the Panchayat.

Reservation of Seats

The constitutional scheme seeks to redress caste and gender discrimination by

providing for mandatory reservation for women and members of the SC and ST
communities in the various tiers of the Panchayati Raj system.

Article 243D provides for 33 percent reservation for women in Panchayat institutions
as well as for the position of chairpersons. Rural women, who for centuries have lived
in conditions of malnutrition, illiteracy, and powerlessness, are now taking leadership
roles in addressing these very issues. This Article further provides for the reservation
of seats in these bodies for SCs and STs according to their proportion in the
population in that Panchayat.

For example, if citizens belonging to SC communities constitute 17 percent of the

local population, then 17 percent of the seats in the PRIs shall be reserved for them.
One-third of the total seats reserved for SC and ST communities shall be reserved for
women belonging to these communities. Thus, in the above-mentioned example, not
only will 17 percent of the seats be reserved for SCs and STs, 1/3rd of the 17 percent
will be reserved for women belonging to SC and ST communities, which will be
counted towards the 33 percent reservation for women.

Of the total number of posts of Chairpersons available in a State, there shall be

reservation of seats for SCs and STs according to their proportion in the population in
that State. Of the total number of posts of Chairpersons available in a State, 33
percent shall be reserved for women. However, the posts reserved for women will be
identified on a rotation basis, so that every Panchayat at some point of time or the
other is chaired by a woman.

The extent of reservation that is permissible under this provision was debated in the
case of Krishna Kumar Mishra v State of Bihar, where the following main issues
were agitated before the Patna High Court:

19
 I. The constitutional validity of reservation in Panchayat elections.
II. Determination of permissible limit of reservation in Panchayat elections. After
considering these issues and interpreting various provisions of the
Constitution and the Bihar Panchayati Raj Act, the High Court held that
reservation can be made in the matter of Panchayat elections, in favor of
Scheduled Castes, Scheduled Tribes, and Backward Classes. However, it was
clarified that the limit of such reservation cannot exceed 50% of the total
seats. The court further held that no reservation can be made against solitary
seats like that of Mukhiya of Gram Panchayat, Pramukh of a Panchayat
Samiti, or Adhyaksha of a Zilla Parishad.

Principle of Subsidiarity

Article 243C (3) enunciates the principle of subsidiarity between the various tiers of
the Panchayati Raj system. The Article provides that the State Legislatures may by
law provide for the representation of:

a) Chairpersons of Panchayats at the village level in the Panchayats at an

intermediate level
b) Chairpersons of Panchayats at the intermediate level in the Panchayats at the
district level
c) Member of Legislative Assembly representing constituencies falling wholly or
partly in a Panchayat area, in intermediate or district level Panchayats, but not
in the village level Panchayats,
d) Member of Legislative Council being registered as electors within a
Panchayat area at the intermediate level, in that Panchayat at the intermediate
level, and if they are electors of a Panchayat area at the district level, then in
the district level Panchayat.

The Article while providing for subsidiarity mentions that the persons so represented,
shall have equal voting rights as the other members of that Panchayat.

5.6 STRUCTURE OF PANCHAYATI RAJ SYSTEM

Balwant Rai Mehta Committee in its Report suggested a three-tier system of

Panchyati Raj Gram Panchayat at the village level, Panchayat Samiti at Block level,
and Zilla Parishad at the district level.

5.6.1 Gram Panchayat

The Panchayat is the executive committee of Gram Sabha. It is known by a variety of
names. The membership of the Panchayat varies from five to thirty-one. Members of
the Panchayat are called Punches and are elected by the Gram Sabha by secret ballot.
The President is directly elected by the people in Orissa; by the Gram Sabha in
Assam, Bihar, Punjab, Uttar Pradesh, and West Bengal, and by the Panches in Andhra
Pradesh, Gujarat, Jammu and Kashmir, Kerala, Madhya Pradesh, Maharashtra, and
20
Karnataka. The President can be removed from office by a majority of two-thirds of
the votes of the members of the panchayats present and voting. Several states provide
for reservations of a specified number of seats for women as well as members of
Scheduled Castes and Scheduled Tribes. The tenure of the Panchayat in various states
varies from three to five years.

The Panchayat is looked up as an instrument for the execution of the Community

Development Programme. The functions of Panchayat are obligatory and
discretionary. The Panchayat may also be entrusted with any other functions given by
the state government. To perform these functions the panchayat has been given
certain sources of revenue. It has been seen that the Panchayats do not function as an
effective institution. Agenda of meetings was not issued, meetings held without a
proper quorum, sometimes with proper delay. They suffer from a lack of resources,
secretarial assistance, adequate powers, and cooperation from revenue and police
agencies, guidance and supervision, apathy on the part of Panches. Apart from all
these, they have group rival which hinders smooth functioning. There exists the
complexity of rules and procedures, lack of timely action against defaulters, the
proximity of the Panchayat Samitis. So, to reduce all these loopholes some remedial
suggestions by the Balwant Rai Committee are as follows: Finances of the Panchayats
should be augmented; Powers and functions should be more clearly enunciated;
Efficient and regular secretarial assistance should be there; roles and procedures
should be simple; cooperation from revenue and police agencies must be ensured;
Cooperation of government departments is needed; gram sabha should be active;
Education among the people need to be stepped up. There is state control over
Panchayat. It includes the power to delimit and alter its jurisdiction, appointment of
staff, records management, financial administration, election. The state government
may call for necessary reports and records. It may suspend or remove a panch or a
sarpanch under certain conditions.

5.6.1.1 Function of Gram Panchayat

At this level, administrative functions include (i) Preparation of annual plans for the
development of the village Panchayat; (ii) preparation of the annual budget;(iii)
mobilizing relief in natural calamities;(iv) removal of encroachment on public
properties;(v) organizing voluntary labor and contribution or community works ;(v)
maintenance of statistics of the village;(vi) any other functions entrusted by the
Panchayat Samiti, Zilla Panchayats or state or central government on an agency basis,
is most commonly found across the states. Apart from this, village defense,
information and publicity, and the constitution of Nyaya Panchayat were found in
Andhra, West Bengal, and Maharastra. In the case of developmental and social
activities, are agriculture, social forestry, animal husbandry, rural housing, education,
etc. Next is a maintenance function which includes rural electrifications, rural
sanitation, and conservation.

21
5.6.2 Panchayat Samiti

The Panchayat Samiti is the intermediate tier in the PRIs of rural local government in
India. The term varies from three to five years. There is no uniformity in consisting of
a Panchayat Samiti in different states. It consists of Ex-Officio, associate, and co-
opted members. The Sarpanches of the Panchayats is an ex-officio member. Members
of State Legislatures and Parliament are also members. Women members and
members from Scheduled Castes and Scheduled Tribes in Panchayats are also
members. President of Panchayat Samiti can be removed from his office by a no-
confidence vote of the Panchayat Samiti passed with a special majority. President
exercises control over the Block Development Officer for implementing resolutions
of the samiti or its standing committee. He has all access to all records of the
Panchayat Samiti. He is empowered to demote, suspend or dismiss any member of
the staff whose jurisdiction is less than the whole Block.

The Panchayat Samiti is the pivot of the Panchayati Raj system of rural local
government. It is the principal executive body in all the states except Gujarat and
Maharashtra charged with the responsibility of implementing Community
Development Programmes. Besides, it also acts as an agent of the state government in
the performance of tasks that may be assigned to it. It also exercises supervision and
control over Panchayats within the jurisdiction and provides necessary technical and
financial assistance to them. It scrutinizes budgets of the Panchayats of the area under
its control and makes suggestions to them. Functions may be classified in two broad
areas: (1) provision of civic amenities and (ii) fulfillment of development functions.

A Panchayat Samiti appoints several Committees to assist it in the performance of its

functions. A Panchayat Samiti appoints several Committees to assist it in the
performance of its functions. Members of the Standing Committee are elected by the
members of the PS. The President of the PS shall be the ex-officio member or the
chairman of the standing committee. Taxation is not a major source of revenue of the
Samiti. The Samiti gets a certain share of land revenue collected in the state. The
Samiti is equipped with the administrative machinery called the Block Development
Officer. As, all the executive authority in the three-tier local government structure has
been vested in the Panchayat Samiti, the body at the district level being given only a
supervisory and coordinating role.

5.6.2.1 Functions of Panchayat Samiti

At this level, general administrative functions include –providing relief in natural

calamities and other works entrusted by the Zilla Panchayat. Some of the functions
like trusts, social education, and village defense corps (Gujarat alone). Publicity and
information (Gujarat and Maharastra) and statistics (Gujarat, Maharastra, and
Rajasthan) were very common. Regarding developmental social activities concerned
are agriculture, animal husbandry, fisheries, social farm, and forestry. Among the

22
maintenance functions, the market and fair maintenance, health, family welfare,
sanitation, and medical and cultural activities and sports were common
responsibilities of PS in many states

5.6.3 Zilla Parishad

The Zilla Parishads constitutes the apex in the Panchayati Raj System of rural local
government in India. It is a corporate body. Membership of Zilla Parishads has been
designed in such a way as to link it, with the intermediate tier of PR, i.e., PS. ZP is an
official rather than a popular body because of its ex-officio and co-opted membership.
The Zilla Parishad‗s membership varies between forty to sixty. Urban local
governments in the districts must be represented in the ZP to enable them to view and
function in a comprehensive, intelligent, and meaningful manner. The term varies
from three to five years. The members of the ZP elect amongst themselves a president
called chairman. He exercises administrative supervision over the chief executive
officer for implementing resolutions and orders of the ZP and sends a confidential
report on the CEO to the Divisional Commissioner. The provision is made in all
statutes to remove the president by a vote of no-confidence. The ZP functions through
a network of standing committees.

In most of the states, the ZP has been assigned with the executive‗s authority,
particularly in those of planning and development, and designed to be the strongest
tier of PRIs Except in Gujarat and Maharashtra, ZP functions as a supervisory and
coordinating body. It coordinates development plans prepared by the Panchayat
Samiti, advises the state government on all matters relating to developmental
activities in the district informs the district collector and Divisional Commissioner
about irregularities, collects statistics relating to the activities of local authorities in
the district, it advises the state government on allocation of work to be done among
Panchayats and Panchayat Samitis. Normally sources of income available to ZP are
taxes, non-tax revenue, grants from State Government, etc.

Many problems hindered the success of PRIs (i) the illiteracy and conservatism of the
village people;(ii) rural local self-government have become riddled with casteism,
communalism, factionalism;(iii) benefits not reached to the common man;(iv)
dishonesty and corruption in the local bodies;(v) urbanization is another problem;(vi)
excessive government control is also responsible for the slow progress;( vii) shortage
of funds;(viii) irregular elections to these bodies.

5.6.3.1 Functions of Zilla Parishad

At this level, the major responsibility of the general administrative function is of

overall supervision, coordination; consolidation, integration, and implementation of
development schemes at block and district levels. Preparation of plans for economic
development and social justice of the entire district and securing the execution of
plans, projects, schemes, or other PS works were commonly found in almost all the
23
states. Amongst the developmental variety, agriculture including extension and
horticulture, animal husbandry, dairying and poultry, social forestry, fuel, and fodder
education were quite common among all the states. Health, and hygiene and family
welfare, medical, and sanitation were the only responsibility of maintenance variety
performed commonly performed by two or three levels of PRIs in most of the states.
In the case of maintenance variety of functions, the situation is slightly better as
compared to the development and social. Most of these functions are performed by
the GP only. In sum, concerning development and social variety of functions, the
demarcation of the areas of responsibilities in the state Acts are not defined clearly.

5.7 SUMMARY

The fruit of democracy could not immediately travel to a level below that of the state
as the transfer of power from the British to Indian hands on the mid-night of the 14th
August 1947 was, in effect the handing over the keys of the administration to the
people‗s representatives at the center and the state levels. It was expected that by this
pattern state legislature will travel from the state headquarters down through the
districts and the block to the village Panchayats. In this way, there will be a complete
line-up of the millions in this country from the Gram Sabha to the Lok Sabha. the
people of India will govern themselves through their representatives in institutions
from the Panchayat to the Parliament and then democracy will travel from Lok Sabha
to Gram Sabha. ―Panchayati Raj thus reflects the new concept of inter-connected
democracy from the Gam-Sabha to the Lok Sabha. (Dey)

It can be said that India is on the threshold of a historic transition of political power to
the grassroots with all the states completing the process of enacting fresh legislation
on strengthening the PRIs on 23 rd April 1994. As many as 11 states pushed through
fresh legislation in 72 hours, some of them even in the early hours of 23 rd April 1994
to beat the stipulated deadline of 23 rd April 1994, the day Panchayats became part of
the Indian Constitution. However, the 73 rd constitutional Amendment Act does not
apply to Jammu and Kashmir, Mizoram, Nagaland, and certain scheduled areas of the
country. But mere legislative enactments do not ensure the effectiveness and viability
of the PRIs in the states. What is more important is their operationalization. So, we
will take up the state-wise assessment of the New Panchayati Raj in Action to have a
clear picture of the ground realities.

5.8 EXERCISE

1. Explain the historical background of Panchayati Raj.

2. Explain Balwant Rai Mehta Committee.
3. Explain Ashok Mehta Committee.
4. What is the 73rs constitutional amendment act of the Indian Constitution?

24
 5. Explain the structure and functions of Gram Panchayat.
6. Explain the structure and functions of Panchayat Samiti.
7. Explain the structure and functions of Zilla Parishad.

5.9 REFERENCE

Maheswari, S. 1 99 1, Local government in India, Orient Longman, Mumbai.

Mohanty, R. and Rajesh Tandon (eds), 2006, Participatory Citizenship: Identi&

Exclusion Inclusion, Sage Publications New Delhi.

Palanithurai G, Ragupathy V, 2008, Communities, Panchayats and Governance at

Grassroots, Concept Publishing Company, New Delhi.

PRIA, 2003, Civil Society and Panchayats, New Delhi.

Rahadive, J.D. 2005, Women in SelfHelp Groups and Panchayati Raj Institutions:
Suggesting synergetic linkages, Centre for Women's Development Studies, New
Delhi.

Saraswati S, 1988, Youth in India, Indian Council for Social Science Research, New
Delhi.

Tandon, R. and Ranjitha Mohanty (eds), 2003, Does Civil Society Matter-
Govemance on Contemporary India, New Delhi.

25
UNIT-6 LOCAL SELF GOVERNANCE: URBAN

Structure
6.1 Objective
6.2 Introduction
6.3 Urban Governance: Concept and Need
6.4 Urban Local Bodies and Municipal Governance in India
6.5 The 74th Constitution Amendment Act of 1992 and Urban Local Bodies
6.6 Municipal Legislation
6.6.1 Composition of Municipalities
6.6.2 Powers, Authority and Responsibilities of Municipalities (Article 243 W)
6.7 The Municipal Corporation – Organisational Structures
6.8 Urban Governance in India: Structural Changes and Innovations
6.9 Impediments in Improved Governance
6.10 Measures to Strengthen Urban Governance
6.11 Summary
6.12 Exercise
6.13 References

6.1 OBJECTIVE

After reading this unit, you will be able to:

• Define urban governance

• Explain Urban Local Bodies and Municipal Governance in India
• Describe structural changes and innovations in urban governance
• Discuss the impediments of improved urban governance
• Measures to strengthen Urban Governance

6.2 INTRODUCTION

Governance, in modern times, has been becoming an important means for achieving
societal development objectives. Although governance improvements are perceived
differently in the developed and developing worlds, it is also becoming an area of
convergence where both developed and developing societies could learn from
experiments and make use of it for transforming respective societies. Governance is a
concept that is used in different meanings in different contexts; it varies from the

26
narrow structural definition of its management of public affairs by government
constituents i.e., legislation, executive, and judiciary, to the processes that ensure
deliveries, participation, justice, respect of rights, innovation and networking. Urban
Governance is derived from the concept of governance about urban areas to be
reflective of how the various constituents of public service delivery are organized to
increase the welfare of citizens (both current and future).

6.3 URBAN GOVERNANCE: CONCEPT AND NEED

Urban Governance is derived from the concept of governance about urban areas to be
reflective of how the various constituents of public service delivery are organized to
increase the welfare of citizens (both current and future). It can only be measured
relatively, and somewhat subjectively, how effective the institutions are in terms of
the principles of sustainability, decentralization, efficiency, equity, participation,
transparency, accountability, civic engagement and citizenship, and security. It
requires a periodic strengthening of these aspects of city management to ensure
service delivery, which is considered achievable through strategies of enabling,
participation, and capacity building.

The urban or city governance definition and process are essentially those about
governance in general i.e., central to the concept of city governance are the notion
that a multitude of actors is involved in the city governance process. However,
initiatives towards better governance can come not only due to the pressures of
urbanization but also with increasing financial constraints and fragmented
responsibilities, which is making many cities realize now that only a collegiate effort
can improve the city and its competitiveness, thereby the cities can discover the
virtuous circles.

In this context, city governance is more concerned with a network of the system of
governance rather than the government, in which all sectors (public, private, and
other social organizations) and geographies (cities, regional and national) interact in
the decision making process to produce an efficient and effectively managed city as
well as promoting city at a global level. This perspective has important implications
for city strategists, planners, businesses, and real estate players, because, once
adopted, it involves all of them in a complex and networked process of decision
making that can shape and change the future of their city. The realization of this is
leading to the emergence of new networks that create new platforms for discussion
and debate on how to make the cities better governed and what resources are required
to make it happen.

It is the partnerships that need to be forged and developed to improve the overall city
governance. However, city governance can be understood not only in the static
framework of interactions but also as a dynamic interaction between these major
stakeholders and external agencies operating outside the city. Sometimes, these
27
agencies might provide a direction to the change, known as good urban governance.
In many ways, urban governments in the developing countries are a classic case for
the application of ‗good governance‘ prescription because of:

• Multiple government agencies with poor interconnection

• Government major provider of services, but often inefficient
• Extensive but uneven regulation
• Conflicting agency agendas producing a regulatory stalemate
• The frustration of development opportunities
• Widespread evasion of regulation
• Considerable scope for corruption

6.4 URBAN LOCAL BODIES AND MUNICIPAL GOVERNANCE IN INDIA

Municipal governance in India was first introduced in 1687 when the Madras
Municipal Corporation was formed, followed by the creation of the Calcutta
Municipal Corporation and the Bombay Municipal Corporation in 1726. In 1850, the
Improvements in Towns Act were passed by the Government of India that established
a system of councilors and gave them administrative authority. Subsequently, Lord
Mayo‘s Resolution of 1870 instituted the system of city municipalities and called for
the introduction of an elected president to lead them.

In 1882, Lord Ripon‘s Resolution of Local Self-Government created the outline and
structure of municipal governance in India. It introduced a two-tier system of
governance to increase governance efficiency through the decentralisation of
functions. Based on the 1918 Montague-Chelmsford Report, the Government of India
Act 1919 introduced the system of ‗Dyarchy‘, where power-sharing arrangements
between the state and the local bodies differed, but conformed to the same
organizational pattern.

The District Municipalities Act of 1920 transformed the Municipal Councils into
elected bodies and granted them powers to flesh out their budgets. Government of
India Act 1935 brought local government within the purview of the state or provincial
government and granted them enhanced powers.

The following types of urban local bodies are found in India:

1) Municipal Corporation – Municipal Corporation is established by the Act of

state government for the big cities of states and by the Act of Parliament for
the big cities of Union Territories. A corporation has three authorities. First is
the corporation council headed by the Mayor, who is assisted by the Deputy
Mayor. The councilors and Mayor are directly elected by the people. Council
is a deliberative and legislative organ of the corporation. The second organ of
the corporation are the standing committees to deal with various activities like
health, education, public works and are empowered to take decisions in their
28
 respective fields. The third authority of the corporation is the Municipal
Commissioner, who is a government officer and is responsible for the
implementation of the decisions taken by the council and standing
committees.
2) Municipalities – They are set up by the Acts of the state legislature for the
administration of small cities or towns. It also has three authorities. First, the
municipal council is the legislative branch of the municipality and is headed
by the Chairman, who in turn is assisted by a Deputy Chairman. The standing
committees facilitate the work of the municipality in various fields such as
health, taxation finance, etc. The third authority of the municipality is the
Chief Municipal Officer, who is appointed by the state government and is
responsible for the general administration of the municipality.
3) Notified Area Committee – This may be created either in a town that is fast
developing or may not fulfill the conditions for the creation of a municipality.
It is known as Notified Area Committee because it is created through a
notification of the state government published in the official gazette. It is not a
statutory body and all its members and chairman are nominated by the
government. It performs similar functions as performed by a municipality.
4) Town Area Committee – It is created by a separate Act of state government
for the administration of small towns. It performs a limited number of
functions like street lighting, drainage, etc. As provided in the Act, it may be
wholly elected or totally nominated or partly elected or partly nominated body
5) Cantonment Boards – They are established to perform municipal functions
for the civilian population living in cantonment or military areas. Its
noticeable feature is that it is created and works under the central Act of 1924
under the administrative control of the Ministry of Defence. There are three
types of Cantonment Boards depending upon the civilian population in the
Cantonment Area. It consists of partly elected and partly nominated members.
The members are elected for a three-year term. The military officer
commanding the cantonment station is the ex officio chairman of the
Cantonment Board.
6) Townships – Townships are established by a public sector undertaking as its
housing colony to provide civil amenities to its employees living in the
township. It has no elected members and its affairs are managed by a Town
Administrator appointed by the public sector undertaking.
7) Port Trusts – Such urban bodies are established by an Act of the Parliament
to manage and protect ports and to provide civic amenities to the port area. It
is headed by an official appointed by the central government. It has both
elected and nominated members.
8) Special Purpose Agencies – The state governments establish some special
purpose agencies to perform some specific functions of municipalities. They
function as separate bodies not under the control of municipalities. They may

29
 be created either by an act of State Legislature or by an order of the executive.
Some of these agencies are Housing Board, Water Supply Undertaking,
Electricity Supply Undertakings, Urban Development Authorities, etc.

6.5 THE 74TH CONSTITUTION AMENDMENT ACT OF 1992 AND URBAN

LOCAL BODIES

Before 1992, Indian local governments did not have a constitutional status but only a
statutory status under state law. Therefore, the governance of urban areas was directly
under the control of the state government. This changed with the enactment of the
74th Constitution Amendment Act, 1992. For the first time in the history of urban
governance, Urban Local Bodies (ULBs) were granted a constitutional position as the
third tier of government.

These bodies were given a constitutional outline for conducting regular elections,
powers, and financial devolution. The Amendment assigned local bodies the
responsibility of providing basic services.

Urban Local Bodies (ULBs) are classified depending on the population:

• Nagar Panchayats: for ‗rurban‘ areas

• Municipal Councils: for smaller urban areas
• Municipal Corporations: for metropolitan areas

“In many states, local bodies have become weak and ineffective on account of a
variety of reasons, including the failure to hold regular elections, prolonged
supersessions, and inadequate devolution of powers and functions. As a result,
Urban Local Bodies are not able to perform effectively as vibrant democratic units
of self-government.”

Municipalities were designed to incorporate elected representatives, experts, and the

Municipal Chairperson. They were awarded a five-year term with re-election
scheduled for within 6 months of dilution. Towards this, a state-level Election
Commission was established.

The 74th Constitution Amendment Act also sought to institute the Directive Principle
of decentralisation in the urban context. ULBs were granted powers and
responsibilities in terms of preparation of plans, implementation of development
schemes, and administration of taxes. A state-level Finance Commission was
established to review the finances of ULBs falling within its purview.

In addition to these three tiers of local government, two other important

organisational structures the District Planning Committee and the Metropolitan
Planning Committee have been created under the Constitution. The 74th Constitution
Amendment Act also added the ‗Twelfth Schedule‘ to the Constitution. The Schedule

30
(Article 243W) enumerates the functional responsibilities that the municipalities are
meant to shoulder.

Main Characteristics of Urban Local Governments

Type of The rationale for Constitution and Brief Characteristics

Municipality Before 1992 After 1992
• Established in metropolitan areas or
big cities.
• Wider functions and larger powers
than councils enjoy more autonomy and
Municipal have larger revenue resources.
Corporation • Separation of deliberative from
• Constituted in
executive functions and vesting of all ―large urban
executive powers in an appointed areas‖*
authority that is independent of the
elected body.
• Most popular form of local
Municipal government in urban areas • Constituted in
Committee/ • Set up in cities and large towns ―small urban
Council • Extent of State control is relatively areas‖*
larger than corporations
• Constituted after 1992 • Constituted in
Nagar ―areas in
Panchayat transition from
rural to urban‖*
• Set up by State government in medium
and small towns
• Created for areas that do not fulfill
conditions for the constitution of
councils but are otherwise important. •
Notified Area Also created for newly developing Abolished
Committee
towns or areas where industries are
being established.
• All members including the chairman
are nominated by the State government
and not elected.
•Semi-municipal authority constituted
for small towns.
Town Area • Members are either wholly nominated Abolished
Committee
or wholly elected or partly nominated
and partly elected.

31
Note: *A ―large urban area‖, a ―small urban area‖ and a ―transitional area‖ are
defined as such area ―as the Governor may, having regard to the population of the
area, the density of the population therein, the revenue generated for local
administration, the percentage of employment in non-agricultural activities, the
economic importance of such other factors as the Governor may deem fit, specify by
public notification‖ (Constitutional Provisions Relating to Village Panchayats and
Municipalities in India, 1999).

The number of municipalities (i.e., municipal corporations, municipal councils, and

Nagar panchayats) differs from State to State. States with a large number of urban
areas have a higher number of municipalities. There are some States where municipal
corporations and/or Nagar panchayats do not exist. This is because the urban areas in
such States do not fulfill the conditions for the constitution of a particular type of
local government.

Municipalities are constituted by the State governments, which specify the class to
which a municipality shall belong by the provisions of the municipal. For this
purpose, the size of the urban population is the main criterion. However, in some
States consideration is also given to other criteria, such as the location of the urban
area and the per capita income.

6.6 MUNICIPAL LEGISLATION

Urban local governments are governed by the provisions of the State municipal Acts.
Every state has its municipal Act. The State legislature is empowered by the central
government to decide on the structure, functions, and powers to be entrusted to the
local governments. Although the content and format of various State municipal Acts
are more or less uniform, there are striking differences in the provisions for
devolution of powers, functions, and funds to local governments since this is
determined by the condition of both the State and the local government. The system is
regulated by enactments passed from time to time by State legislatures. Furthermore,
municipalities possess powers to draft local bye-laws on various provisions for the
furtherance of municipal administration. This is because each urban area has its
distinct character. The bylaws are sent to the State legislature for approval. The
municipal Act is, therefore, a comprehensive guiding legal document for the local
government officials and the elected representatives, and Byelaws are framed to
further clarify the administrative procedures.

In every State, two different types of Acts are generally in use – one for the
Municipal Corporations and a common Act for the Municipal Councils and Nagar
Panchayats. In a few States where several municipal corporations exist, the legislature
has framed municipal Acts, especially for some corporations. The remaining
corporations in the State are governed by a common municipal corporations Act.

32
6.6.1 Composition of Municipalities
There have been significant changes in the composition of municipalities since their
constitution. In the ancient period, municipal administration was in the hands of the
ruling class or the ruling government and their subordinate offices and departments.
Urban citizens were not happy with the prevailing ‗centralized approach‘, which was
characterized by excessive bureaucracy. It was gradually realized that because local
governments were formed for the welfare of the urban citizens, it was necessary to
involve them. This thinking paved the way for citizen‘s participation in municipal
affairs. A select number of urban citizens are now chosen by holding elections to
municipalities. For this purpose, the municipal area is divided into several wards
delineated based on population. There is a contest for the seat/post of councilors in
municipalities among the eligible voters at the ward level. One person from each
ward is elected to the post of councilor. Elections are also held for the post of a mayor
in municipal corporations and a chairperson (also known as a president/chairman) in
municipal councils and Nagar Panchayats.

The State government departments are responsible for the organisation of municipal
elections. Besides, the State government appointed staff and persons nominated by
the State government, citizen‘s representatives have become a part of the local
government. Whereas the appointed staff is trained to handle their duties, citizens‘
representatives are more aware of the quality of life at the ward level. The effort of
the government has been on maintaining a balance in the distribution of power
between the officials and the non-officials and on establishing a democratic form of
local government. To enable wider participation in municipal affairs, seats in local
governments are reserved for some sections of the society. In addition to the
appointed, nominated and the elected functionaries, ex-officio persons are also
affiliated with the local government. A typical composition of an urban local
government is shown below:
Composition of Urban Local Governments
Type of Municipality
Category Municipal Municipal Council/
Corporation Nagar Panchayat
• Mayor; Deputy Mayor • Chairperson/President;
Elected Members • Councilors/Elected Ward Vice-President
Representatives • Councillors/Elected
Ward Representatives
• MPs • MPs
Ward Representatives • MLAs • MLAs
• MLCs • MLCs
Ex-officio Members
• Municipal Commissioner • Executive Officer
Appointed Staff
• Subordinate Staff • Subordinate Staff
Nominated Members • Selected Citizens • Selected Citizens
33
Notes:

i. Elected Members: There is one seat of Mayor/President, Deputy

Mayor/VicePresident in a municipality; there are as many councilors as the
number of wards in a municipality.
ii. Ex-officio Members: MP – Member of Parliament; MLA – Member of
Legislative Assembly; MLC – Member of Legislative Council.
iii. Appointed Staff: There is one position of Municipal Commissioner/Executive
Officer in a municipality; the various sub-committees of a municipality are
run by the subordinate staff in association with the elected members and the
Municipal Commissioner/Executive Officer. Such staff does not have the right
to vote in the meetings of the municipality.
iv. Nominated Members: A certain number of persons having special knowledge
or experience in municipal administration are nominated by the State
government. Such members do not have the right to vote in the meetings of
the municipality.

Reservation of Seats in Municipalities (Article 243 – T)

1. Seats shall be reserved for the SCs and STs in every Municipality and the
number of seats so reserved shall bear, as nearly as may be, the same
proportion to the total number of seats to be filled by direct election in that
Municipality as the population of the SCs in the Municipal area or of the STs
in the Municipal area bears to the total population of that area and such seats
may be allotted by rotation to different constituencies in a Municipality.
2. Not less than one-third of the total number of seats reserved under clause (1)
shall be reserved for women belonging to the SCs or as the case may be,
the STs.
3. Not less than one-third (including the number of seats reserved for women
belonging to the SCs and the STs) of the total number of seats to be filled by
direct election in every Municipality shall be reserved for women and such
seats may be allotted by rotation to different constituencies in a Municipality.
4. The offices of Chairpersons in the Municipalities shall be reserved for the
SCs, the STs, and women in such manner as the Legislature of a State may, by
law, provide.
5. The reservation of seats under clauses (1) and (2) and the reservation of
offices of Chairpersons (other than the reservation for women) under clause
(4) shall cease to affect the expiration of the period specified in Article 334.
6. Nothing in this Part shall prevent the Legislature of a State from making any
provision for reservation of seats in any Municipality or offices of
Chairpersons in the Municipalities in favor of a backward class of citizens.

34
Duties of Municipalities

The basic objective of an urban local government has changed from the maintenance
of law and order in the early years to the promotion of the welfare of the community
in recent times. The State municipal Acts provide an exhaustive list of functions,
which are classified into obligatory and optional or discretionary functions. The
former has to be necessarily performed by the local government and for which
sufficient provision in the budget has to be made. Failure to perform any of these
functions may compel the State government to supersede a municipality.
Discretionary functions may be taken up depending upon the availability of funds.
Municipal functions listed in the State municipal Acts generally fall in the following
broad categories: (a) public health and sanitation; (b) medical relief; (c) public works;
(d) education; (e) development; and (f) administrative.

Functions of Urban Local Governments

S.No. Category Description

Public Health Water supply, public vaccination, control of diseases,
1 and Sanitation prevention of pollution, collection & disposal of rubbish,
maintenance of sewers, etc.
2 Medical Relief Establishment & maintenance of health institutions, etc.
Construction & maintenance of streets, bridges, etc.,
3 Public Works control & regulation of building activity, street lighting,
tree plantations, etc.
Establishment & maintenance of educational institutions,
4 Education
etc.
Construction & maintenance of markets, shopping
centers, drinking water stand posts, wells, parks, gardens,
5 Development
etc.; preparation of comprehensive plans for development
& growth of the town, etc.
Preparation of annual reports, maintenance &
6 Administrative development of the municipal property, regulation of
traffic, registration of births & deaths, etc.

Furthermore, the Seventy-Fourth Amendment Act, 1992 provides that State

legislatures may endow municipalities with 18 functions. Whereas many of these
functions (such as urban planning, water supply, sanitation, slum improvement, etc.)
were already listed in the municipal Acts of most States, certain new functions have
been included, namely planning for economic and social development; urban forestry,
protection of the environment and promotion of ecological aspects; safeguarding the
interests of weaker sections of society, including the handicapped and mentally
retarded; urban poverty alleviation; and promotion of cultural, educational and
aesthetic aspects. It is understood that the listing of the 18 functions has been done to

35
ensure that State governments give priority to at least those functions that are of
importance to every urban area. In most State municipal Acts, the list of 18 functions
has been inserted.

6.6.2 Powers, Authority and Responsibilities of Municipalities (Article 243 – W)

Subject to the provisions of this Constitution, the Legislature of a State may, by law,
endow: a) the Municipalities with such powers and authority as may be necessary to
enable them to function as institutions of self-government and such law may contain
provisions for the devolution of powers and responsibilities upon Municipalities,
subject to such conditions as may be specified therein, concerning: i) the preparation
of plans for economic development and social justice; ii) the performance of
functions and the implementation of schemes as may be entrusted to them including
those about the matters listed in the Twelfth Schedule; b) the Committees with such
powers and authority as may be necessary to enable them to carry out the
responsibilities conferred upon them including those

about the matters listed in the Twelfth Schedule.

Twelfth Schedule

1. Urban planning, including town planning;

2. Regulation of land-use and construction of buildings;
3. Planning for economic and social development;
4. Roads and bridges;
5. Water supply for domestic, industrial, and commercial purposes;
6. Public health, sanitation, conservancy, and solid waste management;
7. Fire services;
8. Urban forestry, protection of the environment and promotion of ecological
aspects;
9. Safeguarding the interests of weaker sections of society, including the
handicapped & mentally retarded;
10. Slum improvement and up-gradation;
11. Urban poverty alleviation;
12. Provision of urban amenities and facilities, such as parks, gardens,
playgrounds;
13. Promotion of cultural, educational, and aesthetic aspects;
14. Burials and burial grounds; cremations, cremation grounds, and electric
crematoriums;
15. Cattle pounds; prevention of cruelty to animals;
16. Vital statistics, including registration of births and deaths;
17. Public amenities, including street lighting, parking lots, bus stops, and public
conveniences; and
18. Regulation of slaughterhouses and tanneries.

36
Division of Powers - Elected, Nominated, and Administrative

The 74th Constitution Amendment Act provides the outline for elected and
nominated councilors. The number of elected councilors varies according to the
population of an area. Nominated councilors are to be selected by the elected
councilors for their expertise in municipal administration. However, they are not
granted voting rights.

6.7 THE MUNICIPAL CORPORATION – ORGANISATIONAL

STRUCTURES

The 74th Constitution Amendment Act does not specify any specific organisational
structure for municipal administration in India. This is an issue for state legislation
and the structure differs from state to state.

The Ministry of Urban Development drafted a Model Municipal Law, 2003 which
was circulated to state governments. The rationale for the lack of a centrally
administered Municipal Model is that local bodies need to be flexible to respond
better to local requirements. As detailed below, two broad models are commonly in
use.

I. Commissioner system

The mayor

The Mayor in the Municipal Corporation is typically chosen through indirect

elections by the councilors among themselves, for a term of one year, which is
renewable. The Mayor does not have executive authority. Councilors and Committee
Councillors act as a committee. The most powerful committee is the standing
committee, which functions as the steering board exercising executive, supervisory,
financial, and personnel powers. It is composed of elected members varying in
number between seven and sixteen through a system of proportional representation of
councilors.

The Executive

The Municipal Commissioner acts as the Chief Executive Officer and head of the
executive arm of the Municipal Corporation. All executive powers are vested in the
Municipal Commissioner. The powers of the Commissioner are provided by the
statute and delegated to the Standing Committee.

II. Mayor in council model

This form of city governance is similar to a cabinet government and follows the
framework of state and national governments. This model consists of a Mayor and a
cabinet, with individual portfolios, chosen from among the elected councilors. The
37
Municipal Commissioner acts as the Principal under the supervision of the Mayor
who is the Chief Executive Officer.

Although the above ―model‖ structure may seem relatively simple, in reality, urban
governance is a confusing mix of multiple agencies. Some are new while others are
legacies of older regimes; some are answerable to local government while others to
state-level or even national government.

6.8 URBAN GOVERNANCE IN INDIA: STRUCTURAL CHANGES AND

INNOVATIONS

India has been experiencing several changes in the political and economic space,
which have some implications to governance and, so also, to urban governance. India
had followed a mixed economic model with the public sector leading the economy
and public spending determining the welfare of the society. There was a significant
deviation in this approach through economic policy reforms in 1991 that were
brought as a necessity to make India emerge as a strong economy in line with
competition from other countries. With this added pressure on services, in addition to
the pressures from rapid urbanization gripping the country in the 1980s, markets
emerged as an important institution in the wider allocation of resources, in their
ability to mop-up and bring-in private resources in economic activities and in
representing the needs (and aspirations) of growing consumer class in cities.

Legal Provision relating to Municipal Governance

74th Constitutional Amendment Act in 1992 sought to give a new lease of life to
municipal bodies by identifying them as the third tier of urban governance. The
Amendment Act focused on devolving additional functions to the municipal bodies
and urging the state governments to assign them more taxation powers commensurate
to their additional responsibilities. These are as follows:

i. Municipal elections and functioning of ward committees

As per a study conducted by the NIUA (National Institute of Urban Affairs),

municipal elections have been held by most of the states. Nine states have constituted
ward committees to ensure representation from each ward in the decision-making
process. However, ward committees are functional only in Tamil Nadu and Kerala.
Kerala is the only state where the ward committees are functioning successfully in
every ward and towns having a population above 1 lakh.

ii. Transferring of functional responsibilities

Most of the states have incorporated a provision in the Municipal Acts for the
devolution of power to the municipal bodies. However, the extent of functions
devolved differs from state to state. The states of Kerala, West Bengal, and Tamil

38
Nadu have assigned some additional responsibilities apart from those mentioned in
the 12th Schedule.

iii. State finance commission and financial reforms

The finance commissions constituted in various states of India have attempted a

detailed review of the financial position of the municipal bodies. Most states have
constituted two SFCs (state finance commissions) so far.

iv. Constitution and functioning of DPCs and MPCs

The DPCs (district planning committees) was constituted to achieve integrated

regional planning. It was envisaged that the DPCs would prepare draft development
plans, including a spatial plan for the district, and would integrate the common
interest of the rural and urban areas within the district. Their role would also be
advisory to the local bodies in preparation of development plans and their effective
implementation. Coordination and monitoring of the implementation of district
development plans and allocation of resources to local bodies for planning and
implementation of local-level projects contained in the district development plans
would be another area of intervention by the DPCs.

MPCs (metropolitan planning committees) were to be constituted in every

metropolitan area. The purpose was to accord constitutional recognition to metro
regional planning to augment investment in economic activities and infrastructure, by
putting in spatial planning inputs. MPCs would be responsible for functions such as
preparation of draft development plan for the metropolitan areas, spatial coordination
of plans prepared by the municipalities and panchayats in the metro area, and
recommending modifications in the local area plan. The MPCs would also advise
local bodies in preparation of development plans and, thereafter, monitor effective
implementation of the approved development plan of the region.

It is widely held in the public finance literature that the Act, however, did not address
the mobilization of resources to cover financial requirements of service provision but,
rather, exacerbated it by the addition of new functions. Yet, as noted earlier, cities
have not done enough in terms of improving governance modes and building
governance structures that can anticipate changes and prepare themselves for the
same. The capacity of many local governments to plan and manage their cities is
limited and, as a result, they are not able to meet the challenges of increasing
demands.

6.9 IMPEDIMENTS IN IMPROVED URBAN GOVERNANCE

Urban governance and management have predominantly been the constitutional

domain of state governments. The municipal bodies have been functioning under state
governments, which have been delegating authority, powers, and functions to them
39
through state legislative enactment. These local institutions of urban government have
become weak over the years due to a host of factors, including encroachment on
traditional and legitimate municipal functions by creating parastatals and urban
development authorities, weak executive system, fragile fiscal health, and inadequate
staffing and expertise in municipal management.

i. Issues in decentralization

As discussed in the earlier section on the implementation of the 74th Constitutional

Amendment, states have incorporated provisions in their Municipal Acts for
transferring additional functions to the municipal body, but the extent of functions
transferred differs from state to state. Further, the performance of Municipal Bodies
in undertaking these functions varies from city to city even in the same state.
Discussions with stakeholders brought out that the capacity and resource constraints
of municipal bodies are the major reasons for this difference in their performance.
While the larger municipal corporations still have access to funds, the smaller
municipal councils are financially very weak. Further, the devolution of functions to
the municipal bodies is also affected by the fact that in some cities, the parastatals,
which traditionally delivered certain basic functions, have not been dismantled. As a
result, they continue to perform certain functions that may have legally been passed
on to the municipal bodies. The continued existence of the parastatals has led to
overlaps and often conflicts in the roles and responsibilities of each agency involved
in municipal governance. In such a scenario it becomes difficult for the citizens to
hold any particular agency responsible for inadequate service delivery.

ii) Financial impediments

The ULBs are financially weak, and while there is a provision to levy and collect
adequate user, charges, such provisions are not fully utilized. Many municipal bodies
are running into deficits and are heavily dependent on government grants. The state
budgetary allocations have, however, been drying up for most states, and it is being
realized that the traditional system of funding based on plan and budgetary allocations
will only reduce in the future.

iii) Operational capacity issues

Most ULBs face problems due to lack of capacity, improper staffing patterns, and
lack of standardization. They do not have the institutional, operational, educational,
and legal capability to develop commercially viable infrastructure projects, mobilize
resources for the projects, and implement them. Lack of adequate training is the main
impediment in introducing new technologies and management styles in the working
of the municipal corporations. E-governance initiatives, accounting reforms, and in
fact, even private participation all require a certain level of training of the staff on IT
systems, accounting norms, and so on.

40
 iv) Insufficient public participation

The urban governance system lacks people‘s involvement in the decision-making

process. While there is little effort on part of the municipal bodies to include people
in the process, the problem gets compounded by the fact that there is very little
awareness amongst citizens themselves on their role in the governance process.

v) Issues in transparency and accountability

The lack of transparency and accountability in the working of urban local bodies has
already been brought out in the earlier discussions on the Municipal Disclosure Law.
The main impediment towards achieving transparency and accountability is not the
lack of understanding of the need for the same but the lack of means to achieve the
same. Most ULBs are severely capacity constrained both in terms of funds and
manpower. In such a scenario, it becomes difficult to put in place systems that would
enhance accountability. The root cause of the problem of inefficient service delivery
is the capacity constraints of ULB.s.

6.10 MEASURES TO STRENGTHEN URBAN GOVERNANCE

The Planning Commission of India constituted a Working Group on Urban

Governance for the formulation of the 12th Five Year Plan. Some of the
recommendations of the committee for strengthening urban governance are as
follows:

1) Standardizing the classification of ULBs:

The states should adopt standard norms for the classification of ULBs. It would be
advisable that all the municipalities should be reclassified into three categories:
Municipal Corporation for large urban areas of 5 lakh and more population;
Municipal Council for urban areas of 1 lakh to 5 lakh population and Nagar
Panchayat for towns below 1 lakh population.

2) Strengthening Ward Committees:

There is wide variation in the functioning of ward committees across the state.
Although the legal provisions for the constitution of a Wards Committees have been
made in most of the states, the actual spirit of the Amendment is diffused. Hence, the
constitution of ward committees and their functioning needs to be incentivized.
Further, there is a need to establish area sabhas and to create the linkage between area
sabhas and ward committees to ensure that accountability and participatory processes
became a reality.

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 3) Strengthening Metropolitan Planning Committees:

The 74thAmendment specific establishment of a Metropolitan Planning Committee

(MPC) for preparing development plans at the metropolitan level. However, MPCs
are yet to evolve as per the spirit of the constitutional amendment. Only a few states
have initiated the creation of such entities. The central government needs to support
the state government in this respect.

4) Empowerment of political office bearers:

The Mayors or Chairpersons of the ULBs should be accountable to people and need
to have power and tenure commensurate with this objective. The local conditions
should determine whether the cities should adopt a ―Mayor in Council‖ system or an
―Executive Mayor‖ system. Also, there is a critical need for building the capacity of
the political executive specifically in areas such as sensitization vis-à-vis the need for
reforms, service level benchmarks, etc.

5) The convergence of functions of Parastatals/State Bodies with Local

Bodies:

Historically, due to poor staffing and technical capabilities of the Local Bodies,
several Para-Statal Bodies were created for providing services listed in the 12th
Schedule. Consequently, a large number of parastatals, including Development
Authorities, Water Supply & Sewerage Boards, Slum Housing & Development
Boards, and PWD, etc. have been performing various functions that could have been
vested with the Local Bodies by the mandate of the 74thAmendment. The multiplicity
of agencies providing various services in the Urban Sector have led to overlapping,
ambiguity, and wastage of resources. Over and above that, the parastatal bodies are
not elected Bodies and are not directly answerable to the citizens. There is a need for
activity mapping for these bodies.

6) Framework for Governance of Mega Cities:

The problems of megacities are admittedly complex. The large scale of interventions
required for core services such as water supply, sanitation, and roads, leads to
formidable administrative challenges. This is made more complex as trunk services
historically have not been mapped or digitized, unregulated use of vacant lands have
to lead to haphazard growth, the proliferation of slums, unauthorized construction,
and encroachment. Therefore, the challenge before the megacities is how to ensure
good municipal administration keeping in view such large complexities. There is a
need for creating a governance system for these cities.

7) Strengthening the Organisational Capacities:

The poor quality of urban managers is one of the major reasons for sub-optimal urban
administration. The manpower available in most of the urban local bodies is not
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equipped with the necessary technical and planning skills to meet the growing urban
challenges. There is an urgent need for increased investment, financial management,
and audits in local bodies. Thus, the creation of a municipal cadre is essential.

8) Regulatory Mechanisms for Delivery of Basic Urban Services:

An Independent Urban service Regulator is the need of the hour as the current
paradigm of service providers deciding service levels and tariff is outdated. The
regulator would monitor the provision of service as well as tariff regime and ensure
transparency and efficiency.

9) Public-Private Partnership(PPP):

PPPs which are structured around a robust revenue model (including user charges,
targeted subsidies, and viability gap funding) and offer a good prospect of a return on
investment can contribute to systemic gains and better management of urban services.
The State governments should bring out a legislative framework to address the entire
gamut of issues in the implementation of PPP Projects and develop clear policies
about the identification of projects which can be developed and implemented on a
PPP basis, delivery processes, project development, approval, and implementation
process, guiding principles of contract management, etc.

10) Accountability and Citizen Participation:

A more interactive and participative framework should be followed by ULBs to

ensure greater accountability to the citizens. Citizen Report cards, like the one
prepared by the Public Affairs center in Bengaluru, need to be replicated across all
cities.

11) Use of E-Governance and Technology for Improvement of Delivery of

Services and Need for Database:

Information Technology (IT) can play an important role in improving governance.

With municipal administration becoming increasingly complex, the benefits of IT
adoption are becoming more and more visible across several municipalities. The tools
of IT and E-Governance should be strengthened and adopted in all the ULBs and for
this, whatever skill up-gradation is required, should be done.

6.11 SUMMARY

The phenomenon of urbanization, globalization, and liberalization are increasing

pressure on service delivery in the cities of developing countries that are engulfed by
a vast number of problems. Unfortunately, most of the cities are ill-equipped to tackle
the problems and pressures because either they gave inadequate thought about the

43
trajectories of city growth or because they did not plan and allocate resources to do it;
even otherwise, there are inefficiencies built-in through traditional designs of
institutions of service delivery made on political and bureaucratic forces. This is
leading to government failures in service delivery, which can be addressed by
institutional innovations under partnership mode (apart from governance reforms) to
steer urban governance in the right direction. However, policy reforms are also
needed so that the right kinds of incentives prevail for nurturing new institutions.

6.12 EXERCISE

1. How do you measure effective Urban Governance?

2. What are the main components of the 74th Constitution Amendment Act,
1992?
3. Who are the key players in the decision making and implementation process
of governing the cities?
4. What are the duties of the municipality?
5. What are the impediments to improved urban governance?
6. What are the broad aims of implementing e-governance in municipalities?

6.13 REFERENCE

Chamaraj K. (2006), Jawaharlal Nehru National Urban renewal Mission JNNURM) -

a critique Delhi Human Development Report 2006

Mathur M P. (2007), Impact of the Constitution (74th) Amendment Act on the urban
local bodies: a review NIUAWP 07-02 (National Institute of Urban Affairs). 2007,
Documentation of Best Practices, Delhi, NIUA.

Tewari, V. (2004), Municipal reforms for sustainable urban infrastructure

development in India, Paper presented at the United Nations Asia Pacific Leadership
Forum: Sustainable Development for Cities, Hong Kong, 25-27 February 2004.

Aijaz R. (2007), Challenges for Urban Local Governments in India Asia Research
Centre, London School of Economics and Political Science.

Chaubey P K. (2006), Urban Local Bodies in India: the quest for making them self-
reliant New Delhi, Indian Institute of Public Administration.

Jha G. (1993), Seventy-Fourth Constitution Amendment and the empowerment of

municipal government: a critique, Urban India Xl1l June-December)

Jha G. (2003), Municipal Financial Resource Mobilisation Status, Concerns and

Issues New Delhi, Infrastructure Professionals Enterprise (P) Ltd
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Jha G. (2006), Urban Governance: municipal finance imperatives Pune, State Institute
of Urban Development, YASHADA

Mathur 0P. (2006), Urban Finance, India Infrastructure Report Delhi, Oxford
University Press

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