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

The 74th Amendment to the Constitution of India in 1992 sought to provide a framework for the devolution of powers and responsibilities to urban local bodies (ULBs) to function as effective units of local governance. However, more than two decades later, ULBs in many parts of India remain inadequately empowered both functionally and financially.

Functional Reluctance:

  1. Limited Devolution: Despite the constitutional mandate, many states have been slow in transferring functions listed in the Twelfth Schedule to ULBs.
  2. Bureaucratic Control: In numerous states, the functioning of ULBs is heavily influenced by the state-appointed bureaucracy, undermining the decision-making powers of the elected representatives.
  3. Parallel Bodies: The establishment of parallel bodies (like development authorities, water boards) which oversee significant urban functions weakens the role and significance of ULBs.

Financial Reluctance:

  1. Dependency on State Grants: A large portion of the funds for ULBs comes from grants and allocations from state governments, limiting their financial autonomy.
  2. Limited Taxation Powers: While ULBs have the power to levy taxes, the range of taxes and the rate at which they can be levied is often determined by the state government.
  3. Inefficient Collection: Even within the existing ambit, the collection efficiency for property taxes and other local dues by many ULBs is low, further straining their resources.
  4. Untapped Potential: Many ULBs have not fully explored or leveraged avenues like public-private partnerships, municipal bonds, or user charges to enhance their financial position.

Factors for the Reluctance:

  1. Political Considerations: Empowering ULBs may lead to a shift in local power dynamics, something state-level politicians might not be comfortable with, especially if the ULB leadership is from a rival political faction.
  2. Administrative Overreach: State-level bureaucracy might perceive strong ULBs as a challenge to their authority and control.
  3. Capacity Concerns: There are concerns about the capacity and expertise of ULBs to handle devolved functions, especially in smaller urban areas.
  4. Fiscal Concerns: States might be apprehensive about granting greater financial autonomy fearing potential fiscal mismanagement at the local level.


The vision behind the 74th Amendment was to create robust urban governance systems that address the unique challenges and opportunities of urban areas. Empowering ULBs both functionally and financially is critical to realize this vision. While there have been successes in some states and cities, a broader, more consistent approach to empowerment is essential. This requires political will, capacity building, and a collaborative framework wherein both state governments and ULBs work in tandem to achieve urban development goals.

February 2024