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Development Agency)	5. Expert Committee on Mani Shankar 2012 2013	Leveraging Panchayats Aiyar
for Efficient Delivery of	Public Goods and	Services
NOTES AND REFERENCES	1. The subject of ‘Local Government’ is mentioned in the State	List under the Seventh Schedule of the Constitution.
2. This bill was passed by the Lok Sabha on 22 December,	1992, and by the Rajya Sabha on 23 December, 1992.	Later, it was approved by the 17 state assemblies and
received the assent of the president on 20 April, 1993.	3. The Act defines all these terms in the following manner:	(a) Panchayat means an institution (by whatever name
called) of selfgovernment for rural areas.	(b) Village means a village specified by the governor by	public notification to be a village for this purpose, and
includes a group of villages so specified.	(c) Intermediate level means a level between the village	and district levels specified by the governor by public
notification for this purpose.	(d) District means a district in a state.	4. A judge of a high court can be removed from his office by
the president on the recommendation of the Parliament.	This means that a state election commissioner cannot be	removed by the governor, though appointed by him.
5. At present (2019), ten states of India have scheduled areas.	These are: Andhra Pradesh, Telangana, Jharkhand,	Chhatisgarh, Gujarat, Himachal Pradesh, Madhya Pradesh,
Maharashtra, Odisha and Rajasthan. Presently (2019),	there are a total of ten tribal areas (autonomous districts) in	the four states of Assam (3), Meghalaya (3), Tripura (1) and
6. S.K. Singh, Panchayats in Scheduled Areas, Kurukshetra,	May 2001, p. 26.	7. This Act received the assent of the President on 24
December, 1996.	7a. Second Administrative Reforms Commission, Government	of India, Report on Local Governance, 2007, pp. 151–154.
7b. Ministry of Panchayati Raj, Government of India, Roadmap	for the Panchayati Raj (2011–16), pp. 11–12, 23 and 7–8.	8. Report of the Thirteenth Finance Commission (2010–2015),
Volume II, December 2009, pp. 424–426.	9. Panchayati Raj Update, October, 2002, Institute of Social	Sciences, New Delhi.
39 Municipalities	T	he term ‘Urban Local Government’ in India signifies the
governance of an urban area by the people through their	elected representatives. The jurisdiction of an urban local	government is limited to a specific urban area which is demarcated for
this purpose by the state government1 .	There are eight types of urban local governments in India–	municipal corporation, municipality, notified area committee, town area
committee, cantonment board, township, port trust and special	purpose agency.	The system of urban government was constitutionalised through
the 74th Constitutional Amendment Act of 1992. At the Central level,	the subject of ‘urban local government’ is dealt with by the following	three ministries:
(i) Ministry of Housing and Urban Affairs.	(ii) Ministry of Defence in the case of cantonment boards	(iii) Ministry of Home Affairs in the case of Union Territories
EVOLUTION OF URBAN BODIES	Historical Perspective	The institutions of urban local government originated and developed in
modern India during the period of British rule. The major events in this	context are as follows:	(i) In 1688, the first municipal corporation in India was set up at
Madras.	(ii) In 1726, the municipal corporations were set up in Bombay and	Calcutta.
(iii) Lord Mayo’s Resolution of 1870 on financial decentralisation	visualised the development of local self-government institutions.	(iv) Lord Ripon’s Resolution of 1882 has been hailed as the ‘Magna
Carta’ of local self-government. He is called as the father of	local-self government in India.	(v) The Royal Commission on decentralisation was appointed in
1907 and it submitted its report in 1909. Its chairman was	Hobhouse.	(vi) Under the dyarchical scheme introduced in Provinces by the
Government of India Act of 1919, local self-government became	a transferred subject under the charge of a responsible Indian	minister.
(vii) In 1924, the Cantonments Act was passed by the Central	legislature.	(viii) Under the provincial autonomy scheme introduced by the
Government of India Act of 1935, local self-government was	declared a provincial subject.	Committees and Commissions
The committees and commissions appointed by the Central	Government to improve the functioning of urban local governments	are mentioned below in Table 39.1.
Constitutionalisation	In August 1989, the Rajiv Gandhi government introduced the 65th	Constitutional Amendment Bill (i.e., Nagarpalika Bill) in the Lok Sabha.
by conferring a constitutional status on them. Although the bill was	passed in the Lok Sabha, it was defeated in the Rajya Sabha in	October 1989 and hence, lapsed.
Table 39.1 Committees and Commissions on Urban Local	Governments	Sl. Year Name of the Committee / Chairman
No. Commission	1. 1949–51 Local Finance Enquiry P.K. Wattal	Committee
2. 1953–54 Taxation Enquiry John Matthai	Commission	3. 1963–65 Committee on the Training Nur-Ud-din Ahmed
of Municipal Employees	4. 1963–66 Rural-Urban Relationship A.P. Jain	Committee
5. 1963 Committee of Ministers on Rafiq Zakaria	Augmentation of Financial	Resources of Urban Local
Bodies	6. 1965–68 Committee on Service –	Conditions of Municipal
Employees	7. 1974 Committee on Budgetary Girijapati Mukharji	Reform in Municipal
Administration	8. 1982 Study Group on K.N. Sahaya	Constitution, Powers and
Laws of Urban Local	Bodies and Municipal	Corporations
9. 1985–88 National Commission on C.M. Correa	Urbanisation	The National Front Government under V P Singh introduced the
However, the bill was not passed and finally lapsed due to the	dissolution of the Lok Sabha.	P V Narasimha Rao’s Government also introduced the modified
Municipalities Bill inthe Lok Sabha in September 1991. It finally	emerged as the 74th Constitutional Amendment Act of 1992 and came	into force on 1 June 19932 .
74TH AMENDMENT ACT OF 1992	This Act has added a new Part IX-A to the Constitution of India. This	part is entitled as ‘The Municipalities’ and consists of provisions from
Articles 243-P to 243-ZG. In addition, the act has also added a new	Twelfth Schedule to the Constitution. This schedule contains eighteen	functional items of municipalities. It deals with Article 243-W.
The act gave constitutional status to the municipalities. It has	brought them under the purview of justiciable part of the Constitution.	In other words, state governments are under constitutional obligation
to adopt the new system of municipalities in accordance with the	provisions of the act.	The act aims at revitalising and strengthening the urban
governments so that they function effectively as units of local	government.	Salient Features
The salient features of the act are:	Three Types of Municipalities	The act provides for the constitution of the following three types of
municipalities in every state.	1. A nagar panchayat (by whatever name called) for a transitional	area3 .
2. A municipal council for a smaller urban area.	3. A municipal corporation for a larger urban area.	But, there is one exception. If there is an urban area where
municipal services are being provided by an industrial establishment,	then the governor may specify that area to be an industrial township.	In such a case, a municipality may not be constituted.
The governor has to specify a transitional area, a smaller urban	area or a larger urban area, keeping in view the following factors:	(a) Population of the area.
(b) Density of the population therein.	(c) Revenue generated for local administration.	(d) Percentage of employment in non-agricultural activities.
Composition	All the members of a municipality shall be elected directly by the	people of the municipal area. For this purpose, each municipal area
shall be divided into territorial constituencies to be known as wards.	The state legislature may provide the manner of election of the	chairperson of a municipality. It may also provide for the
representation of the following persons in a municipality.	1. Persons having special knowledge or experience in municipal	administration without the right to vote in the meetings of
municipality.	2. The members of the Lok Sabha and the state legislative	assembly representing constituencies that comprise wholly or
partly the municipal area.	3. The members of the Rajya Sabha and the state legislative	council registered as electors within the municipal area.
4. The chairpersons of committees (other than wards committees).	Wards Committees	There shall be constituted a wards committee, consisting of one or
more wards, within the territorial area of a municipality having	population of three lakh or more. The state legislature may make	provision with respect to the composition and the territorial area of a
wards committee and the manner in which the seats in a wards	committee shall be filled.	Other Committees
In addition to the wards committees, the state legislature is also	allowed to make any provision for the constitution of other committees.	The chairpersons of such committees may be made members of the
municipality.	Reservation of Seats	The act provides for the reservation of seats for the scheduled castes
and the scheduled tribes in every municipality in proportion of their	population to the total population in the municipal area. Further, it	provides for the reservation of not less than one-third of the total
number of seats for women (including the number of seats reserved	for woman belonging to the SCs and the STs).	The state legislature may provide for the manner of reservation of
municipality or offices of chairpersons in municipalities in favour of	backward classes.	The reservation of seats as well as the reservation of offices of
chairpersons in the municipalities for the scheduled castes and	scheduled tribes shall cease to have effect after the expiration of the	period specified in Article 334 (which is presently seventy years, that
is, till 2020).	Duration of Municipalities	The act provides for a five-year term of office for every municipality.
However, it can be dissolved before the completion of its term.	Further, the fresh elections to constitute a municipality shall be	completed (a) before the expiry of its duration of five years; or (b) in
case of dissolution, before the expiry of a period of six months from	the date of its dissolution.	But, where the remainder of the period (for which the dissolved
municipality would have continued) is less than six months, it shall not	be necessary to hold any election for constituting the new municipality	for such period.
Moreover, a municipality constituted upon the dissolution of a	municipality before the expiration of its duration shall continue only for	the remainder of the period for which the dissolved municipality would
have continued had it not been so dissolved. In other words, a	municipality reconstituted after premature dissolution does not enjoy	the full period of five years but remains in office only for the remainder
of the period.	The act also makes two more provisions with respect to dissolution:	(a) a municipality must be given a reasonable opportunity of being
heard before its dissolution; and (b) no amendment of any law for the	time being in force shall cause dissolution of a municipality before the	expiry of the five years term.
Disqualifications	A person shall be disqualified for being chosen as or for being a	member of a municipality if he is so disqualified (a) under any law for
the time being in force for the purposes of elections to the legislature	of the state concerned; or (b) under any law made by the state	legislature. However, no person shall be disqualified on the ground
that he is less than 25 years of age if he has attained the age of 21	years. Further, all questions of disqualifications shall be referred to	such authority as the state legislature determines.
State Election Commission	The superintendence, direction and control of the preparation of	electoral rolls and the conduct of all elections to the municipalities
shall be vested in the state election commission.	The state legislature may make provision with respect to all matters	relating to elections to the municipalities.
Powers and Functions	The state legislature may endow the municipalities with such powers	and authority as may be necessary to enable them to function as
institutions of self-government. Such a scheme may contain provisions	for the devolution of powers and responsibilities upon municipalities at	the appropriate level with respect to (a) the preparation of plans for
economic development and social justice; (b) the implementation of	schemes for economic development and social justice as may be	entrusted to them, including those in relation to the eighteen matters
listed in the Twelfth Schedule.	Finances	The state legislature may (a) authorise a municipality to levy, collect
and appropriate taxes, duties, tolls and fees; (b) assign to a	municipality taxes, duties, tolls and fees levied and collected by state	government; (c) provide for making grants-in-aid to the municipalities
from the consolidated fund of the state; and (d) provide for constitution	of funds for crediting all moneys of the municipalities.	Finance Commission
The finance commission (which is constituted for the panchayats)	shall also, for every five years, review the financial position of	municipalities and make recommendation to the governor as to:
1. The principles that should govern:	(a) The distribution between the state and the municipalities of	the net proceeds of the taxes, duties, tolls and fees levied by
the state and allocation of shares amongst the municipalities	at all levels.	(b) The determination of the taxes, duties, tolls and fees that
may be assigned to the municipalities.	(c) The grants-in-aid to the municipalities from the consolidated	fund of the state.
3. Any other matter referred to it by the governor in the interests of	sound finance of municipalities.	The governor shall place the recommendations of the commission
along with the action taken report before the state legislature.	The central finance commission shall also suggest the measures	needed to augment the consolidated fund of a state to supplement the
resources of the municipalities in the state (on the basis of the	recommendations made by the finance commission of the state).	Audit of Accounts
The state legislature may make provisions with respect to the	maintenance of accounts by municipalities and the auditing of such	accounts.
Application to Union Territories	The provisions of this part are applicable to the Union territories. But,	the President may direct that they would apply to a Union territory
subject to such exceptions and modifications as he may specify.	Exempted Areas	The act does not apply to the scheduled areas and tribal areas in the
states4. It shall also not affect the functions and powers of the	Darjeeling Gorkha Hill Council of the West Bengal.	However, the Parliament may extend the provisions of this part to

Development Agency)

5. Expert Committee on Mani Shankar 2012 2013

Leveraging Panchayats Aiyar

for Efficient Delivery of

Public Goods and

Services

NOTES AND REFERENCES

1. The subject of ‘Local Government’ is mentioned in the State

List under the Seventh Schedule of the Constitution.

2. This bill was passed by the Lok Sabha on 22 December,

1992, and by the Rajya Sabha on 23 December, 1992.

Later, it was approved by the 17 state assemblies and

received the assent of the president on 20 April, 1993.

3. The Act defines all these terms in the following manner:

(a) Panchayat means an institution (by whatever name

called) of selfgovernment for rural areas.

(b) Village means a village specified by the governor by

public notification to be a village for this purpose, and

includes a group of villages so specified.

(c) Intermediate level means a level between the village

and district levels specified by the governor by public

notification for this purpose.

(d) District means a district in a state.

4. A judge of a high court can be removed from his office by

the president on the recommendation of the Parliament.

This means that a state election commissioner cannot be

removed by the governor, though appointed by him.

5. At present (2019), ten states of India have scheduled areas.

These are: Andhra Pradesh, Telangana, Jharkhand,

Chhatisgarh, Gujarat, Himachal Pradesh, Madhya Pradesh,

Maharashtra, Odisha and Rajasthan. Presently (2019),

there are a total of ten tribal areas (autonomous districts) in

the four states of Assam (3), Meghalaya (3), Tripura (1) and

6. S.K. Singh, Panchayats in Scheduled Areas, Kurukshetra,

May 2001, p. 26.

7. This Act received the assent of the President on 24

December, 1996.

7a. Second Administrative Reforms Commission, Government

of India, Report on Local Governance, 2007, pp. 151–154.

7b. Ministry of Panchayati Raj, Government of India, Roadmap

for the Panchayati Raj (2011–16), pp. 11–12, 23 and 7–8.

8. Report of the Thirteenth Finance Commission (2010–2015),

Volume II, December 2009, pp. 424–426.

9. Panchayati Raj Update, October, 2002, Institute of Social

Sciences, New Delhi.

39 Municipalities

T

he term ‘Urban Local Government’ in India signifies the

governance of an urban area by the people through their

elected representatives. The jurisdiction of an urban local

government is limited to a specific urban area which is demarcated for

this purpose by the state government1 .

There are eight types of urban local governments in India–

municipal corporation, municipality, notified area committee, town area

committee, cantonment board, township, port trust and special

purpose agency.

The system of urban government was constitutionalised through

the 74th Constitutional Amendment Act of 1992. At the Central level,

the subject of ‘urban local government’ is dealt with by the following

three ministries:

(i) Ministry of Housing and Urban Affairs.

(ii) Ministry of Defence in the case of cantonment boards

(iii) Ministry of Home Affairs in the case of Union Territories

EVOLUTION OF URBAN BODIES

Historical Perspective

The institutions of urban local government originated and developed in

modern India during the period of British rule. The major events in this

context are as follows:

(i) In 1688, the first municipal corporation in India was set up at

Madras.

(ii) In 1726, the municipal corporations were set up in Bombay and

Calcutta.

(iii) Lord Mayo’s Resolution of 1870 on financial decentralisation

visualised the development of local self-government institutions.

(iv) Lord Ripon’s Resolution of 1882 has been hailed as the ‘Magna

Carta’ of local self-government. He is called as the father of

local-self government in India.

(v) The Royal Commission on decentralisation was appointed in

1907 and it submitted its report in 1909. Its chairman was

Hobhouse.

(vi) Under the dyarchical scheme introduced in Provinces by the

Government of India Act of 1919, local self-government became

a transferred subject under the charge of a responsible Indian

minister.

(vii) In 1924, the Cantonments Act was passed by the Central

legislature.

(viii) Under the provincial autonomy scheme introduced by the

Government of India Act of 1935, local self-government was

declared a provincial subject.

Committees and Commissions

The committees and commissions appointed by the Central

Government to improve the functioning of urban local governments

are mentioned below in Table 39.1.

Constitutionalisation

In August 1989, the Rajiv Gandhi government introduced the 65th

Constitutional Amendment Bill (i.e., Nagarpalika Bill) in the Lok Sabha.

by conferring a constitutional status on them. Although the bill was

passed in the Lok Sabha, it was defeated in the Rajya Sabha in

October 1989 and hence, lapsed.

Table 39.1 Committees and Commissions on Urban Local

Governments

Sl. Year Name of the Committee / Chairman

No. Commission

1. 1949–51 Local Finance Enquiry P.K. Wattal

Committee

2. 1953–54 Taxation Enquiry John Matthai

Commission

3. 1963–65 Committee on the Training Nur-Ud-din Ahmed

of Municipal Employees

4. 1963–66 Rural-Urban Relationship A.P. Jain

Committee

5. 1963 Committee of Ministers on Rafiq Zakaria

Augmentation of Financial

Resources of Urban Local

Bodies

6. 1965–68 Committee on Service –

Conditions of Municipal

Employees

7. 1974 Committee on Budgetary Girijapati Mukharji

Reform in Municipal

Administration

8. 1982 Study Group on K.N. Sahaya

Constitution, Powers and

Laws of Urban Local

Bodies and Municipal

Corporations

9. 1985–88 National Commission on C.M. Correa

Urbanisation

The National Front Government under V P Singh introduced the

However, the bill was not passed and finally lapsed due to the

dissolution of the Lok Sabha.

P V Narasimha Rao’s Government also introduced the modified

Municipalities Bill inthe Lok Sabha in September 1991. It finally

emerged as the 74th Constitutional Amendment Act of 1992 and came

into force on 1 June 19932 .

74TH AMENDMENT ACT OF 1992

This Act has added a new Part IX-A to the Constitution of India. This

part is entitled as ‘The Municipalities’ and consists of provisions from

Articles 243-P to 243-ZG. In addition, the act has also added a new

Twelfth Schedule to the Constitution. This schedule contains eighteen

functional items of municipalities. It deals with Article 243-W.

The act gave constitutional status to the municipalities. It has

brought them under the purview of justiciable part of the Constitution.

In other words, state governments are under constitutional obligation

to adopt the new system of municipalities in accordance with the

provisions of the act.

The act aims at revitalising and strengthening the urban

governments so that they function effectively as units of local

government.

Salient Features

The salient features of the act are:

Three Types of Municipalities

The act provides for the constitution of the following three types of

municipalities in every state.

1. A nagar panchayat (by whatever name called) for a transitional

area3 .

2. A municipal council for a smaller urban area.

3. A municipal corporation for a larger urban area.

But, there is one exception. If there is an urban area where

municipal services are being provided by an industrial establishment,

then the governor may specify that area to be an industrial township.

In such a case, a municipality may not be constituted.

The governor has to specify a transitional area, a smaller urban

area or a larger urban area, keeping in view the following factors:

(a) Population of the area.

(b) Density of the population therein.

(c) Revenue generated for local administration.

(d) Percentage of employment in non-agricultural activities.

Composition

All the members of a municipality shall be elected directly by the

people of the municipal area. For this purpose, each municipal area

shall be divided into territorial constituencies to be known as wards.

The state legislature may provide the manner of election of the

chairperson of a municipality. It may also provide for the

representation of the following persons in a municipality.

1. Persons having special knowledge or experience in municipal

administration without the right to vote in the meetings of

municipality.

2. The members of the Lok Sabha and the state legislative

assembly representing constituencies that comprise wholly or

partly the municipal area.

3. The members of the Rajya Sabha and the state legislative

council registered as electors within the municipal area.

4. The chairpersons of committees (other than wards committees).

Wards Committees

There shall be constituted a wards committee, consisting of one or

more wards, within the territorial area of a municipality having

population of three lakh or more. The state legislature may make

provision with respect to the composition and the territorial area of a

wards committee and the manner in which the seats in a wards

committee shall be filled.

Other Committees

In addition to the wards committees, the state legislature is also

allowed to make any provision for the constitution of other committees.

The chairpersons of such committees may be made members of the

municipality.

Reservation of Seats

The act provides for the reservation of seats for the scheduled castes

and the scheduled tribes in every municipality in proportion of their

population to the total population in the municipal area. Further, it

provides for the reservation of not less than one-third of the total

number of seats for women (including the number of seats reserved

for woman belonging to the SCs and the STs).

The state legislature may provide for the manner of reservation of

municipality or offices of chairpersons in municipalities in favour of

backward classes.

The reservation of seats as well as the reservation of offices of

chairpersons in the municipalities for the scheduled castes and

scheduled tribes shall cease to have effect after the expiration of the

period specified in Article 334 (which is presently seventy years, that

is, till 2020).

Duration of Municipalities

The act provides for a five-year term of office for every municipality.

However, it can be dissolved before the completion of its term.

Further, the fresh elections to constitute a municipality shall be

completed (a) before the expiry of its duration of five years; or (b) in

case of dissolution, before the expiry of a period of six months from

the date of its dissolution.

But, where the remainder of the period (for which the dissolved

municipality would have continued) is less than six months, it shall not

be necessary to hold any election for constituting the new municipality

for such period.

Moreover, a municipality constituted upon the dissolution of a

municipality before the expiration of its duration shall continue only for

the remainder of the period for which the dissolved municipality would

have continued had it not been so dissolved. In other words, a

municipality reconstituted after premature dissolution does not enjoy

the full period of five years but remains in office only for the remainder

of the period.

The act also makes two more provisions with respect to dissolution:

(a) a municipality must be given a reasonable opportunity of being

heard before its dissolution; and (b) no amendment of any law for the

time being in force shall cause dissolution of a municipality before the

expiry of the five years term.

Disqualifications

A person shall be disqualified for being chosen as or for being a

member of a municipality if he is so disqualified (a) under any law for

the time being in force for the purposes of elections to the legislature

of the state concerned; or (b) under any law made by the state

legislature. However, no person shall be disqualified on the ground

that he is less than 25 years of age if he has attained the age of 21

years. Further, all questions of disqualifications shall be referred to

such authority as the state legislature determines.

State Election Commission

The superintendence, direction and control of the preparation of

electoral rolls and the conduct of all elections to the municipalities

shall be vested in the state election commission.

The state legislature may make provision with respect to all matters

relating to elections to the municipalities.

Powers and Functions

The state legislature may endow the municipalities with such powers

and authority as may be necessary to enable them to function as

institutions of self-government. Such a scheme may contain provisions

for the devolution of powers and responsibilities upon municipalities at

the appropriate level with respect to (a) the preparation of plans for

economic development and social justice; (b) the implementation of

schemes for economic development and social justice as may be

entrusted to them, including those in relation to the eighteen matters

listed in the Twelfth Schedule.

Finances

The state legislature may (a) authorise a municipality to levy, collect

and appropriate taxes, duties, tolls and fees; (b) assign to a

municipality taxes, duties, tolls and fees levied and collected by state

government; (c) provide for making grants-in-aid to the municipalities

from the consolidated fund of the state; and (d) provide for constitution

of funds for crediting all moneys of the municipalities.

Finance Commission

The finance commission (which is constituted for the panchayats)

shall also, for every five years, review the financial position of

municipalities and make recommendation to the governor as to:

1. The principles that should govern:

(a) The distribution between the state and the municipalities of

the net proceeds of the taxes, duties, tolls and fees levied by

the state and allocation of shares amongst the municipalities

at all levels.

(b) The determination of the taxes, duties, tolls and fees that

may be assigned to the municipalities.

(c) The grants-in-aid to the municipalities from the consolidated

fund of the state.

3. Any other matter referred to it by the governor in the interests of

sound finance of municipalities.

The governor shall place the recommendations of the commission

along with the action taken report before the state legislature.

The central finance commission shall also suggest the measures

needed to augment the consolidated fund of a state to supplement the

resources of the municipalities in the state (on the basis of the

recommendations made by the finance commission of the state).

Audit of Accounts

The state legislature may make provisions with respect to the

maintenance of accounts by municipalities and the auditing of such

accounts.

Application to Union Territories

The provisions of this part are applicable to the Union territories. But,

the President may direct that they would apply to a Union territory

subject to such exceptions and modifications as he may specify.

Exempted Areas

The act does not apply to the scheduled areas and tribal areas in the

states4. It shall also not affect the functions and powers of the

Darjeeling Gorkha Hill Council of the West Bengal.

However, the Parliament may extend the provisions of this part to