25 years since Nagarpalika Act, urban development remains a challenge

On 1st June, it will be 25 years since Presidential assent was granted to the 74th Constitutional Amendment Act, also known as Nagarpalika Act. It gave constitutional status to democratically elected urban local bodies. Over 4,000 constitutional institutions of urban local self-governance with people's representatives exist in the country today.

Despite a constitutional mandate, governance of urban habitats by these elected local bodies has not measurably improved the conditions in India's cities. Traffic congestion, water crisis, poor sanitation, increasing crime and unaffordable housing characterise urban living in India today.

"One of the prime reasons for this inefficiency is lack of structured devolution of authority (mandated by The Constitution of India) and lack of investment in building human and institutional capacities in urban local bodies so that they can perform their roles effectively," says Dr Rajesh Tandon, President, PRIA.

Despite additional and targeted allocations from 13th and 14th Finance Commissions, systematic planned investments in capacity improvements have not materialised. For example, higher proportion of own sources is a good indicator of systematic revenue generation.

Countrywide, urban local bodies generate less than a third of their own revenue. Uttar Pradesh, Chandigarh, Himachal Pradesh and Manipur have lowest proportion of own revenues to total receipts.

Political support and capacity for revenue generation is lacking, except in some southern and western states such as Goa, Andhra Pradesh and Gujarat which have highest proportion of own revenues to total receipts (more than 48%).

Organisational systems and accounting procedures in urban local bodies (key ingredients for organisational efficiency) have not been modernised in line with the constitutional mandate given 25 years ago.

Several states like Bihar, J&K, Assam, Chhattisgarh and Nagaland, have only made partial progress in double-entry financial management systems. Accounting on accrual basis, a universal standard, has also escaped urban local bodies in many states.

As pressures to undertake urban infrastructure development grows, national and state governments announce and promote short-term solutions of creating urban development and finance corporations and Smart City Special Purpose Vehicles. Such 'parallel' bodies, administered by appointed officials, further weaken institutional capacities and mandates of elected urban local bodies.

"The future of 'happy' cities requires that elected urban local bodies must be empowered and their institutional and human capacities sufficiently strengthened. Such an 'upstream investment' is critical in a strong urbanising India," says Dr Tandon.

"It is not enough to improve ease of doing business at the national level; similar ease is necessary at city level to improve delivery of basic services and to attract fresh investment in order to upgrade urban infrastructure across the country."

Practical and imperative steps to empower elected city governments must be taken by all state governments. New national programmes like Smart City & AMRUT need to be leveraged to undertake urgent, methodical efforts towards empowerment and development of elected institutions of urban governance.

The Prime Minister must take a lead in this, evolving a political consensus between central and state governments towards making cities an integral part of vibrant New India.