74th Constitutional Amendment Act 1992 - Municipalities
| |

74th Constitutional Amendment Act 1992 – Municipalities – Indian Polity Notes

74th Constitutional Amendment Act 1992, provided constitutional status to Urban Local Bodies thus providing recognition to third tier of governance. It made way to complete Democratic Decentralisation.

Under Article 243P Municipalities are defined as “institutions of self government in urban areas constituted under Article 243Q”.

By virtue of “Local Self Government” being place under state list, this amendment provides broad framework, upon which states have made laws.

Historical Perspective:

Municipal bodies have a long history in India. The first such Municipal Corporation was set-up in Madras in 1688.

Later municipal corporations were set up for Bombay and Calcutta in 1726. 

Post Independence, constitution in the Directive Principles talk about strengthening Panchayats but didn’t make local self government in urban area mandatory. 

Due to this there was variations in Municipalities across states, as they were enacted by state laws. Many were working as per laws made by Britishers. That’s why need was felt to address this issue and bring uniformity in the working of Municipalities across states. Thus for this purpose, 74th Constitutional Amendment Act was enacted which provided uniformity along with constitutional status to Urban Local Bodies.

Salient Features:

This act added Part IX-A titled as “The Municipalities” and Twelfth Schedule which comprises of 18 functional subject (items) for Municipalities. These 18 subjects can be divided into compulsory and voluntary.

  • It has provided three types of urban local bodies: Nagar Panchayats, Municipality, Municipal Corporation.
  • It provides for direct elections to these Urban Local Bodies. Members (Councillors) will be elected from wards.
  • State Legislatures can provide for manner of election of chairperson of Municipalities.

Key Compulsory Provisions:

  1. Constitution of Nagar Panchayats (in transitional Areas), Municipal Councils(Small Urban Areas) Municipal Corporations (Large urban areas).
  2. Reservation of seats for Scheduled Castes and Scheduled Tribes in proportion of their population.
  3. One third seats will be reserved for women.
  4. State Election Commission will conduct elections for Urban Local Bodies provided under this act.
  5. State Finance Commission will look into financial matters of Urban Local Bodies.
  6. Tenure of Urban Local Bodies will fixed at 5 years. In case they are dissolved earlier, elections shall be conducted within six months.

Key Voluntary Provisions:

  1. Giving representation to Members of Parliament and State Legislature in such Urban Local Bodies.
  2. Providing reservation for Backward Classes.

[Current: Elections for urban local bodies is stalled in Maharashtra even after expiry of 5 years term, over OBC reservation issue. Until its final decision, Supreme Court has halted the process. ].

  1. Giving these Urban Local Bodies power of taxation to levy taxes, duties, tolls and fees etc.
  2. Devolution of power to make these municipal bodies autonomous and provide them with such powers to effectively perform function enumerated in the twelfth schedule.

Types of Urban Local Bodies:

  1. Municipal Corporation: These are created for administration of large urban areas with population more than 10 Lakhs, Like Mumbai, Delhi, Chennai etc. 

Such municipal corporations have three institutions within its ambit:

  • The Council: Legislative Wing. It comprises of directly elected councillors. Amongst them Mayor & Deputy Mayor is elected for term of 2.5 years.
  • Standing Committee: To facilitate working of council.
  • Commissioner: Is the chief executive of Municipal Corporations.
  1. Municipality: These bodies are provided for smaller cities. It’s nomenclature may vary across states. It’s composition is identical to that of Municipal Corporations but head of council is called as President not Mayor. Further in place of Commissioner they have CEO/Chief Municipal Officer.
  2. Municipal Committee/Nagar Panchayats: These are established for areas in transition from rural to urban and have population more than 10,000 less than 25,000.
  3. Notified Area Committee: These are provided for areas which are witnessing rapid growth due to industrialisation and towns which at present is able to satisfy norms for constitution of Municipality, is an important town. Such area is administered by nominated body.
  4. Town Area Committee: Established by State Act for administration of smaller towns. It may be party nominated and party elected.
  5. Cantonment Board: It is established for administration of civil population within cantonment board area(defence area) under Cantonment Act 2006. Such cantonment boards are under control of Union Defence Ministry. It’s partly elected and partly nominated body.
  6. Township: It is established by Public Sector Undertakings Companies to provide civic services families of its employees living in colonies built nearby. It is nominated body.
  7. Port Trust: These are established to provide civic amenities and manage port area, under act of Parliament. It is also a party elected and partly nominated body. 

Significance of Urban Local Bodies:

India is on its to become World’s Most Populous Country, it will create burden on already resources strapped urban local bodies, under this circumstances Urban Local Bodies have key role to play. They have responsibility of providing civic amenities such as water supply, construction and maintenance of roads, streets, drainage, affordable housing etc. In order to be future proof, ULBs need to make plans  possible  population expansion.

They have key role in disaster management, as they act as first respondents in such crisis scenario. In past few years several metro cities like Gurgaon, Pune, Chennai etc. have faced urban floods. With their first hand knowledge of demography cities, it provides them ability to provide support in such crisis situation.

In past few years, many cities have resorted to money market to raise capital via issuance of bonds, which has reduced dependence of grants to certain extent. Using such raised capital they have taken initiatives for citizenry.


  1. Municipal Councils/Municipalities have restricted local autonomy. State government has influence on its working.
  2. Lawmakers at state level are unwilling to further devolve the financial powers to Municipalities, which hampers the financial autonomy and makes them dependent on state government.
  3. Municipalities are governed by laws made by state legislature, it makes it easier for state government to dissolve the municipalities without giving them chance to represent their stand.
  4. There is no oversight on functioning of municipalities which has led to making them inefficient.
  5. Taxation powers granted to Municipalities are in most cases not able to generate revenues for support expenses. They have smaller tax base.
  6. Staff in most Municipalities is ill-equipped and ill-trained.
  7. Boundaries of Municipalities are not increased as per growth of urbanize in its vicinity.
  8. Post implementation of GST, many Municipalities have lost sources of revenues. Eg. Greater Mumbai Municipal Corporation has lost 35% of revenue due to abolition of Octrai which was largest source of revenue.

Measures Required to Address Challenges:

  1. State shall ensure that laws give adequate powers in domain of raising revenue via taxation.
  2. Greater devolution of powers.
  3. Steps shall be taken to de-politicisation of urban local bodies. Especially there is need to reduce undue influence of State Government.
  4. Recommendations of 15th Finance Commission regarding urban local bodies shall be implemented. Which had recommended that grants to urban local bodies shall be increased gradually to 40% in medium term.
  5. Strengthening Municipal Bonds. Encouraging municipal corporations to raise capital in money market by issuing bonds.
  6. Putting into place effective mechanism to compensate for loses to Municipalities due to GST.

To complete UPSC Polity Notes, Click Here

Join our Official Telegram Channel HERE
Subscribe to our YouTube Channel HERE
Follow our Instagram ID HERE

Similar Posts

Leave a Reply

Your email address will not be published. Required fields are marked *