Urban Local Self-Government in India: Evolution and Reforms Post-74th Amendment

India is urbanising at a remarkable pace, and the cities that hold this growing population are run by institutions most people rarely think about. These institutions, known as urban local bodies, were once weak, underfunded, and often little more than extensions of state governments. The 74th Constitutional Amendment Act of 1992 changed this by giving them, for the first time, a permanent place in the Constitution. This post traces how urban governance evolved from a fragmented colonial-era system into a structured, three-tier framework, and examines what the reforms achieved and where they still fall short.

Urban governance before the 74th Amendment
The five types of urban bodies that once existed
The 74th Amendment: a constitutional turning point
From five categories to three
Key reforms that reshaped urban democracy
Direct elections and secure tenure
Reservation for women and marginalised groups
Ward committees and State Election Commissions
The Twelfth Schedule and 18 functions
Finances and planning
Where the reforms fall short

Urban governance before the 74th Amendment

Urban local governance in the country has deep historical roots. The first municipal corporation was set up at Madras in 1687-88, followed by corporations in Bombay and Calcutta in 1726. Lord Ripon’s Resolution of 1882 is widely hailed as the “Magna Carta” of local self-government, earning him the title of father of local self-government in the country. Yet for all this history, urban bodies remained legally fragile right up to the early 1990s.

The core problem was constitutional. Local government was listed only under Entry 5 of the State List, which treated it purely as a state responsibility with no binding obligations attached. As a result, municipal elections were frequently suspended or superseded for indefinite periods, eroding the very foundation of grassroots democracy. State governments steadily encroached on the functions and revenues of these bodies, leaving many too weak to deliver even basic services.

The five types of urban bodies that once existed

Before 1993, urban governance was a patchwork of several different kinds of bodies, each suited to a particular type of settlement:

Municipal Corporations: These governed large cities and metropolitan areas such as Delhi, Mumbai, and Kolkata. A council of directly elected councillors formed the deliberative wing, headed by a Mayor, while a Municipal Commissioner from the IAS handled administration.

Municipal Councils: Also called municipal boards or committees, these administered smaller cities and towns.

Town Area Committees: Set up for small towns, these had minimal authority covering basic tasks like street lighting, drainage, and conservancy.

Notified Area Committees: These managed fast-developing towns or areas lacking basic amenities. Significantly, all their members were nominated by the state government rather than elected.

Cantonment Boards: Created and run by the central government, these served the civilian population living in military cantonment areas.

The deeper issue was representation. Notified area committees and town area committees were either fully or partially nominated bodies, which meant large numbers of urban residents had no elected voice in how their towns were run. This lack of democratic accountability, combined with chronic financial weakness, is what made reform unavoidable.

The 74th Amendment: a constitutional turning point

The push for reform took shape under the government of P.V. Narasimha Rao, which introduced the Municipalities Bill in the Lok Sabha in September 1991. Parliament passed it in December 1992, and the 74th Constitutional Amendment Act came into force on 1 June 1993. It is also known as the Nagarpalika Act.

The amendment did two structurally important things. First, it added an entirely new Part IXA to the Constitution, covering Articles 243P to 243ZG, dealing specifically with municipalities. Second, it introduced the Twelfth Schedule, listing the functions municipalities are meant to perform. Crucially, the Act brought municipalities under the justiciable part of the Constitution, meaning their existence and core features could now be enforced through the courts. States became constitutionally obligated to set up municipalities according to this framework.

From five categories to three

One of the most visible changes was the simplification of urban bodies into a clean three-tier structure under Article 243Q. The Governor classifies areas by public notice, weighing factors such as population, population density, revenue generated, and the percentage of employment in non-agricultural activities. The three categories are:

Nagar Panchayat: For transitional areas, that is, places shifting from rural to urban character.

Municipal Council: For smaller urban areas.

Municipal Corporation: For larger urban areas.

The older nominated bodies, the town area committees and notified area committees, were folded into this elected framework as municipalities or Nagar Panchayats. The amendment also allowed the Governor to designate an area as an industrial township where civic services are provided by an industrial establishment, in which case a municipality need not be constituted.

Key reforms that reshaped urban democracy

Beyond restructuring, the amendment introduced a set of provisions designed to make urban governance genuinely representative and durable.

Direct elections and secure tenure

Every municipality must now be filled through direct elections. The municipal area is divided into territorial constituencies called wards, and residents directly elect their representatives. This ended the earlier reliance on nominated members. Each municipality has a fixed term of five years. If a municipality is dissolved early, fresh elections must be completed within six months, which protects these bodies from being kept in indefinite suspension as happened before.

Reservation for women and marginalised groups

The amendment built social inclusion directly into the system. Seats are reserved for Scheduled Castes and Scheduled Tribes in proportion to their share of the municipal population. For women, not less than one-third of all seats must be reserved, including seats already reserved for SC and ST women. This is a binding constitutional requirement rather than a voluntary target, and at a time when women’s presence in elected bodies was negligible, it marked a major step toward political inclusion.

Ward committees and State Election Commissions

To bring decision-making closer to residents, the Act provided for Ward Committees in all municipalities with a population of three lakh or more. It also created State Election Commissions, placing the conduct of municipal elections beyond the reach of state executive interference and lending genuine independence to the electoral process.

The Twelfth Schedule and 18 functions

The amendment also defined what municipalities are supposed to do. An illustrative list of 18 functional items was placed in the Twelfth Schedule. These include urban planning, regulation of land use, water supply, public health and sanitation, solid waste management, slum improvement, urban poverty alleviation, environmental protection, and the upkeep of public amenities. Under Article 243W, state legislatures decide exactly which of these powers municipalities will actually hold, particularly for preparing and implementing plans for “economic development and social justice.” That phrase is significant: it frames municipalities not just as service providers but as agents of local development.

Finances and planning

On the money side, Article 243Y requires that the State Finance Commission, originally set up for panchayats, also review the financial position of municipalities and recommend how taxes and grants should be shared. The amendment further mandated District Planning Committees to consolidate the plans of panchayats and municipalities within a district, and Metropolitan Planning Committees for areas with populations above ten lakh, to coordinate development across large urban regions.

Where the reforms fall short

The 74th Amendment created a strong framework, but turning it into reality has been uneven. Because local government remains a state subject, the depth of implementation varies enormously. States like Kerala, Karnataka, and West Bengal have devolved substantial powers and pioneered initiatives such as ward committees and people’s planning campaigns, while several others have adopted a minimalist approach, implementing only the mandatory provisions while keeping firm control over key functions and finances.

The recurring weaknesses tend to cluster around what observers call the “three Fs”: funds, functions, and functionaries. States have devolved only a limited number of taxes, leaving municipalities heavily dependent on higher levels of government and short of skilled staff. Part of the reluctance is political: cities are economic powerhouses, and control over urban land and revenue is something state governments are unwilling to surrender. The financial strain is real. An RBI survey of 221 municipal corporations for 2020-21 found that more than 70% saw revenues fall while their expenditure rose by over 71%.

None of this erases the achievement. The amendment gave urban bodies a constitutional existence that cannot easily be erased, a regular electoral cycle, and a guaranteed voice for women and marginalised communities. The structure is sound; the unfinished task is getting states to honour its spirit and not merely its letter.

What do you think? If cities generate so much of the country’s wealth, why do the bodies that govern them remain so financially dependent on state governments? And would directly electing mayors with longer, secure tenures make urban governance more accountable, or simply concentrate power in fewer hands?

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Table of Contents

Urban governance before the 74th Amendment 🔗

The five types of urban bodies that once existed 🔗

The 74th Amendment: a constitutional turning point 🔗

From five categories to three 🔗

Key reforms that reshaped urban democracy 🔗

Direct elections and secure tenure 🔗

Reservation for women and marginalised groups 🔗

Ward committees and State Election Commissions 🔗

The Twelfth Schedule and 18 functions 🔗

Finances and planning 🔗

Where the reforms fall short 🔗