Enhancing Urban Governance: Devolution of Powers to Local Bodies

India’s cities generate a large share of national income, yet the local governments meant to run them have long struggled for genuine authority. For decades, municipal bodies functioned as little more than extensions of state governments, with no fixed term, irregular elections, and minimal control over money or staff. The 74th Constitutional Amendment Act of 1992 set out to change this by giving urban local bodies a constitutional foundation and a defined set of powers. This post explains what was devolved, how the framework works, and why the gap between the law on paper and the reality on the ground still matters for anyone studying urban governance.

Why the 74th Amendment was needed 🔗

Before 1992, urban local government in India was a state subject with no constitutional protection. Municipalities could be superseded by state governments for long periods, elections were frequently postponed, and councils often functioned without elected representatives for years. There was no uniform structure, no guaranteed financial support, and no obligation to include marginalised groups in decision-making.

The amendment, which came into force on 1 June 1993, added a new Part IX-A titled “The Municipalities” to the Constitution, containing Articles 243-P to 243-ZG. The core idea was that power in a democracy belongs to the people, and that this power should reach citizens through elected local bodies that plan and deliver services close to where people actually live. This is often described as the principle of subsidiarity, where governance happens at the lowest level capable of handling a task.

A three-tier structure for urban areas 🔗

The amendment created three categories of urban local bodies to match different stages of urbanisation. Nagar Panchayats govern transitional areas moving from rural to urban status, Municipal Councils govern smaller urban areas, and Municipal Corporations govern larger cities. This classification recognised that a small town and a metropolitan city face very different governance demands and cannot operate under identical structures.

The Twelfth Schedule and the 18 functions 🔗

The heart of devolution lies in the Twelfth Schedule, which the amendment added to the Constitution. It lists 18 functional areas that states are expected to entrust to municipalities. These functions cover almost every aspect of daily urban life and represent the practical work of running a city.

The 18 subjects include urban planning including town planning, regulation of land use and construction of buildings, planning for economic and social development, roads and bridges, water supply for domestic, industrial and commercial purposes, public health, sanitation, conservancy and solid waste management, fire services, urban forestry and protection of the environment, safeguarding the interests of weaker sections including the handicapped and mentally retarded, slum improvement and upgradation, urban poverty alleviation, provision of urban amenities such as parks and playgrounds, promotion of cultural and educational aspects, burials and burial grounds, cremations and cremation grounds, cattle pounds and prevention of cruelty to animals, vital statistics including registration of births and deaths, public amenities including street lighting and parking lots, and regulation of slaughterhouses and tanneries.

How Article 243-W enables devolution 🔗

It is important to understand that the Twelfth Schedule does not automatically transfer these functions. Article 243-W states that the legislature of a state “may, by law” endow municipalities with the powers and authority necessary to function as institutions of self-government, including the preparation of plans for economic development and social justice and the implementation of schemes related to the Twelfth Schedule.

The word “may” is significant. A government audit document on the functional domain of municipalities notes plainly that the provisions of this article are not mandatory, and that it is for the legislature of a state to decide which powers it devolves to any municipality. This enabling rather than compelling design is the single most important feature for understanding why devolution has been uneven, a point we return to below.

The democratic guarantees built into the amendment 🔗

Devolution of functions would mean little without elected, accountable bodies to carry them out. The amendment therefore embedded several democratic safeguards that states cannot easily ignore.

Regular elections and a fixed term 🔗

Article 243-U fixes a five-year term for every municipality. If a municipality is dissolved before its term ends, fresh elections must be held within a defined period, which prevents the indefinite supersession that was common earlier. To conduct these elections, Article 243-ZA vests the superintendence, direction and control of municipal elections in an independent State Election Commission, separate from the Election Commission of India. This was meant to insulate local elections from political manipulation by sitting state governments.

Reservation for marginalised communities 🔗

Article 243-T mandates reservation of seats for Scheduled Castes and Scheduled Tribes in proportion to their population in each municipality. It also reserves not less than one-third of the total seats for women, a quota that includes women from the SC and ST categories. State legislatures may additionally provide reservation for backward classes. The practical force of this provision is visible in cases like Nagaland, where municipal polls were eventually held with 33 percent reservation for women after prolonged disputes, precisely because the reservation is a constitutional requirement rather than an optional courtesy.

Financial machinery and planning committees 🔗

Article 243-Y requires a State Finance Commission to review the financial position of municipalities and recommend how taxes, duties and grants should be shared between the state and local bodies. The amendment also provided for District Planning Committees and Metropolitan Planning Committees to coordinate development plans across overlapping jurisdictions, recognising that a large metropolitan area cannot be planned in isolated fragments. A metropolitan area is defined as one with a population of one million or more.

What devolution was supposed to achieve 🔗

Taken together, these provisions aimed to turn municipalities from administrative extensions of the state into genuine institutions of self-government. The intended outcomes were better service delivery in areas like water, sanitation and public health, more responsive governance because decisions would be made by locally elected representatives, inclusive participation through reserved seats, and stronger local economic and social development driven by city-level planning.

The logic is straightforward. A municipal councillor who lives in a neighbourhood and faces re-election is more likely to respond to a broken drain or an unlit street than a distant state department. Devolution was a bet that proximity and accountability together would improve the quality of urban life.

The gap between intention and reality 🔗

More than three decades on, the picture is mixed. Scholars describe a persistent paradox of decentralisation in which urban local bodies, though legally empowered, remain functionally dependent on state governments because the actual transfer of what is often called the three Fs (funds, functions and functionaries) remains partial and uneven across states.

Functions retained by states and parastatals 🔗

Because Article 243-W only enables rather than compels devolution, many states have transferred few of the 18 functions in practice. A major structural problem is the proliferation of parastatal agencies: a single metropolitan area may have a municipal corporation for roads and waste, a separate development authority for land use planning, a water and sewerage board, a transport corporation, and a housing board, all controlled by the state rather than the elected city government. A comprehensive audit by the Comptroller and Auditor General, covering 393 urban local bodies across 18 states, found persistent financial stress, staff shortages and only partial devolution of functional powers.

Weak finances and staffing 🔗

Financial weakness compounds the problem. Property tax administration is often poor, with weak valuation and collection systems limiting the revenue municipalities can raise on their own. State Finance Commissions are sometimes constituted late or their recommendations are not fully implemented, producing unpredictable transfers. On the staffing side, reports indicate that a substantial share of municipal posts lie vacant, leaving bodies without the technical and administrative capacity to actually perform devolved functions. An analysis noted that mayors and councillors typically have limited power over funds and functionaries, which leaves many municipalities operating as civic service agencies rather than true self-governing institutions.

Why states hesitate 🔗

The reluctance is not accidental. Cities are economic powerhouses, and control over urban land, planning and large infrastructure projects carries significant political and financial value. Genuine devolution would mean state governments surrendering that control to city councils, which helps explain why states have been slow to fully implement the amendment. Understanding this incentive is essential, because it shows that incomplete devolution is a political choice and not merely an administrative oversight.

The way forward 🔗

Reform proposals tend to cluster around a few themes. The most fundamental is a genuine transfer of the three Fs, so that functions listed in the Twelfth Schedule come with the money and staff needed to perform them. Strengthening municipal revenue through property tax reform, rational user charges and instruments like municipal bonds would reduce dependence on state grants. Giving mayors and councils real authority over city staff and planning would convert formal status into operational power. Successful examples exist within India itself, such as Indore’s waste management system, which contributed to the city being repeatedly recognised as among the cleanest, showing what is possible when local institutions are allowed to function with focus and capacity.

The 74th Amendment remains one of the most significant reforms in India’s governance architecture. It created the constitutional scaffolding for democratic, decentralised urban government. Whether that scaffolding supports a real building or stands largely empty depends on choices made not in 1992, but in state assemblies today.

What do you think? If the 74th Amendment had made devolution of all 18 functions mandatory rather than optional, would Indian cities be governed better today, or would states have found other ways to retain control? And given that cities drive so much of the economy, who should ultimately decide how a city is run: its elected council, or the state government above it?

References

1. https://www.mea.gov.in/Images/pdf1/S12.pdf
2. https://byjus.com/free-ias-prep/municipalities-74-amendment-act-1992/
3. https://www.constitutionofindia.net/constitution_of_india/286/articles/Article%20243W
4. https://mohua.gov.in/upload/uploadfiles/files/chap13.pdf
5. https://www.constitutionofindia.net/articles/article-243za-elections-to-the-municipalities/
6. https://www.deccanherald.com/amp/story/india%2Fnagaland-to-conduct-civil-body-polls-on-may-16-with-33-reservation-for-women-1198611.html
7. https://link.springer.com/article/10.1007/s44327-026-00209-z
8. https://www.policycircle.org/opinion/empowering-urban-local-bodies/
9. https://www.indianrepublic.in/2026/05/urban-local-bodies-why-cities-lack-power-india.html
10. https://theiashub.com/free-resources/mains-marks-booster/devolution-of-powers-and-finances-up-to-local-levels-and-challenges-therein