Functional and Financial Devolution to Urban Local Bodies and their Performance in India

Brijesh Kumar Bajpai


India has headed towards a significant political revolution, almost simultaneously with economic reforms, in the early nineties of the twentieth century. Relative rise of market vis-à-vis state and relative importance of local governments vis-à-vis central and state governments may be viewed as extension of the same logic. The import of perpetual existence, ensured with passage of 73rd and 74th Constitution Amendment Acts, 1992 is yet to be fully realized in terms of complete devolution of functional and financial powers to the elected local bodies across the states in India.

The present paper addresses the issues only related to the functional and financial devolution and powers of only urban local bodies in the state of Uttar Pradesh in India. An attempt has been made as to why (urban) local bodies have become weak and are not able to perform effectively as vibrant democratic units of self-government. In order to attain this, the Constitution (Seventy Fourth Amendment) Act, 1992, has made it mandatory for the state governments to constitute Urban Local Bodies. A new part, Part IX A, has been enshrined in the Constitution after Part IX of the Constitution. It deals with matters like definition, constitution of municipalities and ward committees, reservation, disqualifications, powers and responsibilities, powers to impose taxes, all relating to the urban local bodies. Article 243 Y stipulates that the Finance Commission constituted under Article 243 I shall review the financial position of the urban local bodies and make recommendations regarding distribution of resources between the State and the urban local bodies, determination of taxes, duties etc. grants-in-aid to urban local bodies, among other matters.

To assess the performance of urban local bodies as enshrined in the principals of local self-governance, the paper examines the status of functional and financial devolution to ULBs in the state of Uttar Pradesh and to find out the perception and satisfaction level of the people about the quality of their service delivery. The analysis and results are based on official records, interviews with officials and elected representatives of the ULBs and a detailed field survey to assess the level of satisfaction of the people about the quality of service delivery of ULBs at various levels. Opinion of the public about various aspects of services has been collected on the scale of 1 to 10. The paper is based on a recent study undertaken by the author, sponsored by the Fourth State Finance Commission Uttar Pradesh, India.

The results of the paper show that the local bodies have not been able to fulfil the expectations, which were aroused by the 74th Constitutional amendment. Some basic factors like, lake of own income sources, non-transfer of all mandatory functions, weak administrative system, un healthy relations between elected representatives and officials of ULBs and unsatisfactory service delivery have emerged as basic bottlenecks in the process of healthy functioning of ULBs.  The major reason has been the lack of political commitment and unwillingness to devolve funds and functions to the local bodies on the part of the state government. This is sometimes justified on the ground that the local bodies do not have the capacity to discharge the functions. The correct approach would be to empower the local bodies in terms of functions, funds and functionaries. Simultaneously measures are required to built up the capacity of the local bodies so that they can handle all functions expected from them as mentioned in the Twelfth Schedule of the Constitution.


Financial Devolution , Urban Local bodies

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