Empowering Grassroots: Reimagining Local Governance in India

The Reserve Bank of India's report on municipal corporation finances highlights a pressing issue tied to urbanization: while cities drive 60% of India's GDP and are projected to house half the population by 2050, municipal corporations contribute a mere 0.6% of GDP in revenue receipts. Heavily reliant on grants, they fail to optimize key revenue streams like property tax. Alarmingly, 60% of municipal revenues are concentrated in just 10 corporations, exposing stark inequities in resource allocation. The lack of full devolution of the 3Fs—Functions, Finances, and Functionaries—undermines the effectiveness of grassroots governance. Enhancing fiscal autonomy and empowering local bodies is imperative to strengthen governance and accountability at the urban level.

Current Structure of Local Governance in India
Overview

• Local governance in India comprises institutions that manage planning, administration, and development at the grassroots level.
• It is divided into rural bodies (Panchayats) and urban bodies (Municipalities), which function as regulators, service providers, welfare agents, and enablers of development.

1. State Subject:
   • Local governance is a State List subject under the Seventh Schedule of the Constitution, granting states the authority to regulate local bodies.
2. Empowerment via Article 243G:
   • Article 243G mandates the devolution of powers and responsibilities to local bodies, enabling them to deliver essential services and infrastructure at the community level.

1. Colonial Origins:
   • Local governance systems began during British rule, where limited village administrative structures were established.
2. Gandhian Vision:
   • Mahatma Gandhi envisioned "Gram Swaraj", advocating for self-reliant and self-governed villages.
3. Key Initiatives:
   • 1952 Community Development Programme: Early efforts aimed at rural development but lacked public participation, leading to limited success.
   • 1957 Balwantrai Mehta Committee: Recommended establishing village-level organizations to implement government schemes, forming the foundation for modern Panchayati Raj.
   • 1977 Ashok Mehta Committee: Proposed empowering Panchayats, marking the beginning of "Second Generation Panchayats."
4. Landmark Reforms:
   • 73rd Constitutional Amendment (1992):
     • Institutionalized Panchayati Raj as the third tier of government.
     • Empowered Panchayats with planning and implementation responsibilities for 29 subjects listed in the Eleventh Schedule.

1. Central Finance Commission Grants:
   • Regular grants recommended by the Central Finance Commission to support local body functions.
2. Centrally Sponsored Schemes (CSS):
   • Funds allocated for specific developmental schemes such as MGNREGA, Swachh Bharat, and others.
3. State Finance Commission Allocations:
   • State governments provide funds based on recommendations from their respective State Finance Commissions.

Role of Local Bodies in Strengthening Development in India
Local bodies play a pivotal role in fostering grassroots development, bridging the gap between governance and the community. Their impact spans financial autonomy, infrastructure, welfare, sustainability, citizen engagement, and economic growth.
1. Financial Empowerment and Resource Mobilization

• Decentralized Financial Support:
  • The 15th Finance Commission allocated ₹4.36 lakh crore for local bodies (2021-26), boosting their fiscal autonomy.
• Innovative Financing:
  • Municipal corporations, like Indore, issued green bonds in 2022, raising ₹244 crore for solar energy projects.
• Reform in Revenue Systems:
  • Initiatives such as Bengaluru’s GIS-based property tax system (2023) have significantly increased municipal revenues.

• Smart City Initiatives:
  • Under the Smart Cities Mission, 100 cities are executing projects worth ₹2.05 lakh crore, transforming urban spaces.
• Climate-Resilient Planning:
  • Cities like Surat lead with flood management systems that integrate climate adaptation strategies.
• Sustainable Innovations:
  • Projects such as Indore’s waste-to-energy plant exemplify sustainable urban development led by local bodies.

• Employment Generation:
  • Gram Panchayats facilitated MGNREGA, creating 293.70 crore person-days in FY 2022-23.
• Health Infrastructure:
  • Local bodies were pivotal during the COVID-19 pandemic, managing vaccination centers and ensuring healthcare outreach.
• Livelihood Promotion:
  • Panchayats, under the National Rural Livelihood Mission, helped establish over 90 lakh Self-Help Groups.

• Renewable Energy Leadership:
  • Urban local bodies like Diu have achieved 100% daytime solar energy, becoming India’s first solar city.
• Sustainable Urban Policies:
  • Cities such as Hyderabad enforce green mandates like rainwater harvesting in new constructions.

• Women’s Representation:
  • 50% reservation for women in local bodies has resulted in 45.6% representation in Panchayati Raj Institutions.
• Participatory Budgeting:
  • Cities like Pune implement budgeting processes that engage citizens directly in local governance.
• Neighborhood-Level Governance:
  • The Area Sabha system in Chennai empowers local communities in urban decision-making.
• Gram Sabha Effectiveness:
  • Over 85% attendance in Gram Sabha decisions demonstrates effective grassroots participation.

• Empowering Street Vendors:
  • Through the PM SVANidhi Scheme, local bodies facilitated 65.75 lakh loans, aiding over 50 lakh vendors.
• Skill Development:
  • Initiatives like the Yogyata mobile app by Common Services Centers (CSC) offer vocational training for youth.

Major Challenges Confronting Local Bodies in India
India’s local governance system faces several systemic, financial, and operational challenges, limiting its ability to deliver on developmental goals effectively.
1. Inadequate Financial Resources

• Dependence on Transfers:
  • Local bodies are highly reliant on state and central grants, which are often delayed or come with restrictive conditions.
  • Urban local bodies (ULBs) generate only 0.6% of GDP as their own-source revenue (OSR), far below international benchmarks like Brazil’s 7%.
• Taxation Challenges:
  • Limited capacity to levy and collect taxes undermines their financial independence.
• Untimely Resource Allocation:
  • The 15th Finance Commission allocated ₹4.36 lakh crore for 2021–26, but delays in utilization hinder developmental initiatives.
  • State Finance Commissions are often not constituted on time, affecting the equitable distribution of resources.

• Undermining Autonomy:
  • Frequent interference from state governments weakens local bodies’ decision-making capacity.
  • Instances like the premature dissolution of elected councils or delays in local elections—e.g., all 27 municipal corporations in Maharashtra operated without elected bodies in 2023—highlight this issue.
• Party Politics:
  • Political influences often override public welfare considerations in local decision-making.
  • The dismissal notice issued to Belagavi Municipal Corporation in 2023 is a recent example of such interference.

• Staff Shortages:
  • A 2023 study revealed 35% vacant positions in municipal corporations, severely affecting service delivery.
• Lack of Expertise:
  • Many local bodies lack specialized departments or trained personnel for urban planning, financial management, and technology adoption.
• Inadequate Training:
  • Existing staff often do not receive adequate training to handle modern governance challenges effectively.

• Service Delivery Gaps:
  • Rapid urbanization overwhelms local bodies’ ability to provide essential services like housing, water, and sanitation.
  • Slums make up 17% of the urban population, yet 11 million urban homes remain vacant, reflecting poor planning.
• Disaster Management Failures:
  • Events like the 2022 Bengaluru floods reveal lapses in managing drainage encroachments.
• Ineffective Urban Planning:
  • Mumbai’s chronic water shortages in slums highlight the lack of inclusive infrastructure planning.

• Waste Management Issues:
  • Only 75–80% of municipal waste is collected, and only 22–28% of it is treated, leading to increasing landfill burdens like Delhi’s Ghazipur.
• Pollution Control Failures:
  • Poor enforcement mechanisms exacerbate issues like stubble burning in Punjab and Haryana, worsening air quality.

• Minimal Civic Engagement:
  • Despite constitutional provisions, mechanisms for community participation, like ward committees, are often inactive.
  • As of January 2023, only 8 of 16 states with notified ward committee rules reported functional committees.
• Ineffective Gram Sabhas:
  • Local bodies fail to empower Gram Sabhas, leading to top-down decision-making.
  • The Biological Diversity (Amendment) Act, 2023, has further reduced Gram Sabhas’ influence in biodiversity management.

• Overlapping Jurisdictions:
  • Conflicts between multiple authorities (e.g., Delhi Development Authority and Municipal Corporation of Delhi) create inefficiencies.
• Fragmented Framework:
  • Poor coordination among local bodies, parastatal agencies, and Special Purpose Vehicles (SPVs) leads to delays in urban planning and project execution.

Measures to Empower Local Bodies in India
Empowering local bodies is critical for improving governance, service delivery, and sustainable development. A multi-dimensional strategy involving legal, financial, administrative, technological, and participatory measures is necessary.
1. Strengthening the Legal Framework

• Revising State Legislation: Modernize municipal laws to enhance autonomy and delineate functions clearly through activity mapping.
• Dispute Resolution Mechanisms: Establish dedicated tribunals for timely resolution of disputes involving local bodies, as recommended by the L.M. Singhvi Committee.
• Enforcement and Revenue Powers: Strengthen legal provisions for local bodies to address planning violations, collect dues effectively, and enforce decisions.
• Municipal Borrowing Framework: Enact legislation to facilitate municipal bonds and direct market borrowing mechanisms.

• Modern Taxation Systems: Implement GIS-based property tax systems and ensure rates are linked to market values.
• Municipal Bonds and Credit Ratings: Develop bond markets and introduce credit-rating mechanisms to enable local bodies to raise funds directly.
• Diverse Revenue Streams: Enable revenue generation through tools like betterment levies, impact fees, and land monetization.
• Decentralized Fiscal Planning: Replicate Kerala’s participatory model, integrating Panchayati Raj Institutions (PRIs) into state-level governance.
• Regular Fiscal Devolution: Strengthen State Finance Commissions for predictable and adequate financial transfers.

• Specialized Staffing: Create a dedicated urban administrative cadre with technical experts in urban planning, infrastructure, and financial management.
• Capacity Building: Mandate regular training programs for staff at all levels through dedicated urban governance institutes.
• E-Governance Implementation: Adopt digital platforms for processes like taxation, grievance redressal, and project tracking to improve efficiency and transparency.
• Performance Metrics: Introduce performance-linked appraisals to ensure accountability among staff.

• Master Plans: Ensure all local bodies prepare long-term master plans, updated regularly, with input from ward and area committees.
• Strengthening Planning Committees: Empower Metropolitan Planning Committees to oversee regional development effectively.
• Dedicated Planning Cells: Staff local bodies with professional urban planners to improve the quality and implementation of development plans.

• Digital Platforms: Develop integrated municipal platforms for real-time monitoring of services, revenue collection, and project execution.
• Smart Infrastructure: Implement IoT-based systems for managing assets like water, waste, and energy efficiently.
• Digital Payments: Universalize e-payment systems to increase transparency and reduce leakages.
• Citizen-Centric Tech: Create citizen engagement platforms for grievance redressal, participatory budgeting, and project monitoring.
• Innovative Solutions: Accelerate the adoption of initiatives like SwachhAI for waste management.

• Empowered Ward Committees: Allocate real budgets and decision-making authority to ward and area committees.
• Participatory Budgeting: Mandate mechanisms for citizens to allocate a fixed percentage of municipal budgets to local priorities, integrating blockchain for transparency.
• Social Audits: Institutionalize public audits and citizen monitoring of local projects.
• Gram Sabhas and Area Sabhas: Regularize and digitize local meetings, ensuring greater citizen involvement in decision-making.

• Climate Action Plans: Make climate-resilient planning mandatory for urban local bodies, supported by dedicated funding.
• Waste-to-Energy Solutions: Standardize integrated waste management systems to promote sustainability.
• Real-Time Monitoring: Establish monitoring cells for tracking air quality, waste processing, and pollution levels.
• Green Infrastructure: Encourage the development of urban forests, rainwater harvesting, and water conservation systems.

Key Takeaways
By addressing financial, administrative, and technological gaps while fostering citizen participation and sustainability, local bodies can transform into powerful agents of grassroots development. A synergistic approach involving legal reforms, capacity building, and fiscal autonomy is key to ensuring vibrant and self-reliant local governance in India.

Mind Sprint