The 74th Constitutional Amendment Act (CAA) that came into force on June 1, 1993, promised to institutionalise democratic decentralisation in India’s cities. When the Bill was presented in Parliament in 1991, the statement of objects acknowledged that many Urban Local Governments (ULGs) had become weak and ineffective due to irregular elections, prolonged supersession, and inadequate devolution of powers.
India’s municipal governance journey dates back to 1687 with the formation of the first municipal corporation in Madras (now Chennai). The 74th CAA promised empowered, accountable, and participatory city governments by granting them constitutional status and establishing a national governance. Over three decades later, that promise remains fulfilled more in letter than in spirit.
In hindsight, the 74th Amendment addressed a historic backlog more than it offered a forward-looking blueprint. It fell short of anticipating the institutional demands of large cities in a liberalising economy.
India has witnessed unprecedented economic growth and urbanisation from 1991–92 to 2024–25. The GDP has grown 15-fold from $270 billion to over $3.7 trillion. The Union government’s urban development rose from ₹600 crore to ₹82,576 crore. The urban population surged from 217 million to an estimated 520 million. India ranks second globally in urbanisation, with nearly 37% of its population living in 8,500 urban centres, including more than 4,800 statutory towns and 53 metropolitan areas. By 2030, urban areas are expected to contribute 75% of the GDP. Several states have also invested significantly in urban infrastructure over the past decade. Yet, local governance reforms have lagged behind this development push. Without empowered, accountable city governments, India’s aspiration to become a developed nation by 2047 will remain elusive.
A landmark audit on the implementation of the 74th CAA across 18 states by the Comptroller and Auditor General (CAG) of India found that, on average only four of the 18 (<25%) functions mandated under the Constitution have been fully devolved to ULGs. Over 60% ULGs lacked elected councils. State Finance Commissions were delayed by 412 days on average. ULGs face a 65% shortfall in per capita spending, and a 42% resource-expenditure gap. Citizen engagement in planning and budgeting is minimal, with ward committees largely defunct. Meanwhile, Union and state governments continue to dominate urban development through schemes and parastatals, bypassing elected councils; 72% of urban infrastructure is financed by Union and state governments. ULGs lack control over core functions like planning, water supply, sanitation, housing, and transport. In many cities, even Group D staff appointments require higher-level approval. ULGs have been reduced to extensions of state governments. The consequences are visible: Water shortages, crumbling streets, flooded neighbourhoods, choked roads, overcrowded transport, and a deteriorating environment.
{{/usCountry}}A landmark audit on the implementation of the 74th CAA across 18 states by the Comptroller and Auditor General (CAG) of India found that, on average only four of the 18 (<25%) functions mandated under the Constitution have been fully devolved to ULGs. Over 60% ULGs lacked elected councils. State Finance Commissions were delayed by 412 days on average. ULGs face a 65% shortfall in per capita spending, and a 42% resource-expenditure gap. Citizen engagement in planning and budgeting is minimal, with ward committees largely defunct. Meanwhile, Union and state governments continue to dominate urban development through schemes and parastatals, bypassing elected councils; 72% of urban infrastructure is financed by Union and state governments. ULGs lack control over core functions like planning, water supply, sanitation, housing, and transport. In many cities, even Group D staff appointments require higher-level approval. ULGs have been reduced to extensions of state governments. The consequences are visible: Water shortages, crumbling streets, flooded neighbourhoods, choked roads, overcrowded transport, and a deteriorating environment.
{{/usCountry}}India can no longer afford a business-as-usual approach to urban governance. To change the status quo, we must move beyond token acknowledgements of the 74th Amendment’s limited achievements. A reform strategy must be structured around three components: Measure, Map, and Mandate.
Measure: The Union ministry of housing and urban affairs (MoHUA) lacks a comprehensive assessment of urban decentralisation. Until the CAG audits began in 2020, there was no authoritative data of the 74th Amendment implementation. In contrast, the ministry of Panchayati Raj has conducted seven assessments since the 73rd CAA and tracks panchayat performance via a Panchayat Development Index. MoHUA and state Urban Development Departments (UDDs) must build capacity to measure and monitor decentralisation in real-time, linking data to reform-oriented grants and programmes.
Map: Roles and responsibilities across all levels of government and civic agencies must be clearly mapped and harmonised. States must relinquish excessive control and empower ULGs with policy, finance, knowledge and human resources. Elected councils and mayors must have democratic oversight over all agencies operating in their cities.
Mandate: The Centre must initiate a second wave of constitutional reforms to strengthen the 74th CAA — closing existing loopholes and future-proofing decentralisation. This includes differentiated governance models for metros, and emerging and small cities; guaranteed devolution of functions; time-bound elections; empowered ward committees and area sabhas; and fiscal decentralisation through stable revenue streams and formula-based transfers. The amendment must specify mayoral tenures, delimitation and reservation timelines, revenue entitlements, and citizen forums definitively.
The 74th Amendment was a constitutional promise. It’s time we honour it.
Santosh Nargund is head of participatory governance at Janaagraha Centre for Citizenship and Democracy. The views expressed are personal