Civic bodies lack powers, fund to perform basic municipal tasks: CAG audits
The CAG report found urban planning and fire services are the least devolved functions by law by the states
The 74th Constitutional Amendment Act, which mandated the devolution of powers to urban local bodies so they serve citizens directly and effectively, has not been fully implemented by 18 states even after three decades after Parliament amended the Constitution, performance audits by the Comptroller and Auditor General (CAG) of India have revealed.
A compendium of the performance audit reports on implementation of the 74th Constitutional Amendment Act, released on November 11, said while 17 of the 18 municipal functions have been transferred to urban local self-governments (ULSGs) by law, only four functions have been effectively devolved with complete autonomy. Ten out of the 14 states have overriding powers over ULSGs on more than five of the 16 factors CAG analysed.
The Twelfth Schedule of the Constitution outlines municipal functions such as urban planning, land-use and building regulations, public health, civic amenities, and parking management. The CAG report found urban planning and fire services are the least devolved functions by law.
The constitutional amendment, which came into force in June 1993, empowers local bodies to carry out these essential functions, which are vital for ensuring good quality of life. For this, it mandates states to constitute municipalities, specify their composition, powers, authorities and responsibilities, conduct elections, give powers to USLGs to enact effective laws and policies, levy taxes, and establish institutional mechanisms for performing municipal functions.
With 50% of India’s population projected to be urban by 2050, the report underlined the need for robust ULSGs. However, to achieve this, states need to accelerate their efforts.
The compendium pointed out that 1,600 out of 2,625 ULSGs in 17 states had no active elected council, and only five had directly elected mayors. Six out of the 14 states reserved 50% of their city council seats for women, surpassing the constitutional requirement of 33% reservation for women. Only four of the 15 states have empowered their State Election Commissions (SEC) with ward delimitation.
The compendium also showed that the municipal bodies heavily depend on the central and state governments for funds. On average, only 32% of ULSG’s total revenue was their own. As little as 29% of their expenditure went to development works and welfare programmes, while their average resource expenditure gap was 42%. Only ten states have constituted State Finance Commissions according to the prescribed timeline. On average, there is a delay of 412 days in setting up SFCs in the states.
CAG evaluated the implementation of the constitutional amendment in 393 ULSGs across 18 states from 2019 to 2024, and by June 2024, these reports were placed in state legislatures.
Bengaluru-based non-profit Janaagraha, a Centre for Citizenship and Democracy, helped to synthesise these reports into a compendium. The states audited by the CAG include Andhra Pradesh, Assam, Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Tripura, and Uttarakhand.
To strengthen municipal governance, the CAG report emphasised the need to conduct municipal elections every five years, constitute planning committees to control haphazard urbanisation and empower state finance commissions to focus on better fiscal management.
Srikanth Viswanathan, chief executive officer of Janaagraha, said the compendium provides hard evidence and recommendations on how to remedy the incomplete devolution and weak urban local governments.
“Empowering urban local governments needs to be an important national priority for India, and well-meaning and like-minded stakeholders across government, civil society, and academia must come together to accomplish the same. The CAG’s audit reports and compendium have laid a solid foundation for such an effort.”