PARASTATALS-Local Government III: States – Culprits or bystanders?

The Constitution gives the state governments the power to make laws on all matters relating to the local government, the composition and powers of municipal bodies, and other local bodies for the purpose of self-government.[i]All states therefore have legislations setting out in detail the powers and functions of municipal bodies, and other local bodies.

Apart from municipal institutions, there are also a number of other statutory bodies which are set up to administer one particular aspect of urban governance (The Delhi Jal Board for example, looks after the supply and treatment of water within the city of Delhi). Since these specialized bodies also work under the control of the state government, the functions and powers of such bodies (‘parastatals’) and ULBs often overlap, and the state government retains most of the power over urban governance.

State governments also retain control over the finances of the municipal bodies.  Though municipal bodies are expected to raise taxes and duties on their own, the majority of their finances comes from the state government.  One of the principal duties of state governments is however to implement the changes brought about by the 74th Constitutional Amendment.  These changes were to be brought about in the following areas:

Elections to ULBs: State governments are required to form a State Election Commission which would conduct elections for municipalities every five years.  Most states are performing this task as per their obligations.[ii]

Devolution of functional powers to municipalities: The 74thAmendment inserted a list of 18 essential functions  which state governments had to assign to ULBs through enacting new laws or regulations under existing laws.  There are wide variations in the number of functions which ULBs are performing in different states.  Some other functions are being performed exclusively by the state department.[iii] The functions of ULBs in Karnataka, for example, are mentioned in the Karnataka Municipalities Act, 1964.[iv]

Devolution of financial power: All states were required to grant essential financial powers of raising taxes and collecting duties to ULBs as per the 74thAmendment.  A study of various municipal acts of states shows that ULBs already had the power to levy such taxes. States were also required to set up State Finance Commissions which would allocate funds for rural and urban bodies of local government.  What has been done in this regard by various states is highly questionable.

Next:  Different Types of Urban Local Bodies

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[i]. Entry 5 of List II of the Seventh Schedule of the Constitution.

[ii]. NIUA report on the Impact of the Constitution (74th Amendment) Act on the working of Urban local Bodies, New Delhi, 2005.

[iii]. NIUA report on the Impact of the Constitution.  The findings are based on a review of some Indian states, but not all.  Karnataka was not among the states reviewed for this purpose.

[iv]. Section 87 of the Act.