The Municipalities

INTORDUCTION

 Just like Panchayati Raj in rural areas, a system of self-governance at the smallest units
has been established in urban areas too.
 It was added to the Constitution by the Constitution (Seventy-Fourth Amendment) Act,
1992, which was also known as the “Nagarpalika Act”. This allowed the members of a
particular urban locality to come together and work towards solving the issues in their
area and implementing plans for its development. These self-government bodies are
known as Municipalities.
 The advantage of the municipal system is that after people have elected their
representatives, they have someone to approach for expressing their grievances, and
someone they can hold accountable for the management of the locality.
 The Municipal system is not much different from the Panchayati system, having only a
few changed aspects that help to cater to the different environment
 Now that we have an understanding of panchayats, we can have a quick look at
municipalities given in the provisions of Part IX-A of the Constitution (Article 243P to
Article 243ZG).

Definition

The municipality has been defined in Article 243P as simply an institution of self-government in
an urban area, constituted under Article 243Q.

It has also defined district as a district in a state; and a metropolitan area as an area having a
population of ten lakhs or more, comprising of multiple districts and consisting of multiple
municipalities or panchayats.

Historical Background

 In 1989, the Rajiv Gandhi government introduced the 65th Constitutional Amendment
Bill (Nagarpalika bill) in the Lok Sabha. The bill aimed at strengthening and revamping
the municipal bodies by conferring 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.
 The National Front Government under V P Singh introduced the revised Nagarpalika Bill
in the Lok Sabha again in September 1990. 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 in the
Lok Sabha in September 1991. It finally emerged as the 74th Constitutional Amendment
Act of 1992 and came into force on 1 June 1993.

SIGNIFICANCE

 The urban government is important because they perform a wide range of functions. They
are responsible for providing essential services like:
 water supply,
 waste management,
 sanitation, and
 public transportation.
 They also ensure public safety and security. This is done by maintaining law and order,
emergency services, and promoting disaster management.
 Urban government develops rules and laws to encourage economic development in cities.
 The urban government is in charge of developing infrastructure, housing, and job creation
projects.
 The urban government ensures the effective and equal allocation of resources and
services to its residents.
 Urban government is important as they defend citizens' rights, particularly those of
women and children.
 The urban administration is also in charge of conserving and protecting the environment
in cities.
 Urban governments aim to safeguard citizens' safety and security by enforcing rules and
regulations.

Duties of Municipalities

The basic objective of an urban local government has changed from the maintenance of law and
order in the early years to the promotion of the welfare of the community in recent times. The
State municipal Acts provide an exhaustive list of functions, which are classified into obligatory
and optional or discretionary functions. The former have to be necessarily performed by the local
government and for which sufficient provision in the budget has to be made. Failure to perform
any of these functions may compel the State government to supersede a municipality.
Discretionary functions may be taken up depending upon the availability of funds.

Municipal functions listed in the State municipal Acts generally fall in the following broad
categories:
(a) public health and sanitation; (b) medical relief; (c) public works; (d) education; (e)
development; and (f) administrative .
Functions of Urban Local Governments S. No. Category Description

1. Public Health and Water supply, public vaccination, control of Sanitation diseases, prevention
of pollution, collection & disposal of rubbish, maintenance of sewers, etc

2. Medical Relief Establishment & maintenance of health institutions, etc

3. Public Works Construction & maintenance of streets, bridges, etc., control & regulation of
building activity, street lighting, tree plantations, etc.

4. Education Establishment & maintenance of educational institutions, etc

5. Development Construction & maintenance of markets, shopping centres, drinking water

standposts, wells, parks, gardens, etc.; preparation of comprehensive plans for development &
growth of town, etc. 54 Democratic Decentralization 6 Administrative Preparation of annual
reports, maintenance & development of municipal property, regulation of traffic, registration of
births & deaths, etc

Constitutional Provisions

 Added twelfth Schedule, which contains 18 functional items;

 Added Part IX A, which consists of provision from Article 243P-243 ZG.

o 243P: Definition and Composition of Municipalities:

o 243Q: Constitution of municipalities
o 243R: Composition of municipalities
o 243S: Constitution and composition of wards committees,
o 243 W: Powers, authority and responsibilities of Municipalities.
o 243 X: Power to impose taxes by, and Funds of, the Municipalities.
o 243 Y: State Finance Commission.
o 243 T: Reservation of seats
o 243 ZA: Elections to the municipalities
o 243 ZD: Committee for District planning
o 243 ZE: Committee for Metropolitan Planning

 Article 243P: Definition and Composition of Municipalities:

Article 243P defines municipalities as institutions of self-government at the municipal level.

Clause d of Article states that "Municipal area" means the territorial area of a Municipality as
is notified by the Governor.

 Article 243Q :Constitution of Municipalities

The Constitution, in Article 243Q, provides for the rules regarding the constitution of
municipalities. According to it, three types of municipalities are to be created:

o Nagar Panchayats, for transitioning areas (areas turning from rural to urban)
o Municipal Councils, for smaller urban areas
o Municipal Corporations, for larger urban areas

Most of the members of municipalities are elected, while there may be some who are nominated
by virtue of their special knowledge and expertise. The state may also provide for representation
of members of the Legislative Assembly and Legislative Council in the municipality.

o Nagar Panchayats - Also called Notified Area Committee, it is set up in an area that
does not qualify completely as an urban area but which the government considers
important. It is set up in areas having more than 11,000 but less than 25,000 people
living. The members of a Nagar Panchayat are called ward members. They are headed by
a Chairman.
o Municipal Councils - Also called Nagar Palikas, they are established in areas having
more than 1,00,000 but less than 10,00,000 people living. -Its members are also called
ward members, and they elect a President to head them. Apart from that, the State
appoints a Chief Officer and other officers like health officer, education officer, etc. to
manage the affairs of the municipal council.
o Municipal Corporations - A Municipal Corporation is also called a Nagar Nigam or a
Mahanagar Palika. It is the top tier municipality and enjoys the highest degree of
autonomy. Municipal Corporations are established in urban areas having a population of
more than 1 million.The biggest Municipal Corporations are found in the major
metropolitan cities of India like Delhi, Mumbai, Chennai, Kolkata, etc.

Wards Committees -For the purpose of conducting elections to the municipality, the area under
its jurisdiction is divided into Wards. These Wards also have their own Committees, consisting
of one or more wards within the area of all municipalities having a population of 3 lakh or more.

 Article 243 R : Composition

o Direct Election: All the members of a municipality shall be elected directly by the
people of the municipal area.
 o Wards: For this purpose, each municipal area shall be divided into territorial
constituencies to be known as wards.
o Election of Chairperson: 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.
o Persons having special knowledge or experience in municipal administration without
the right to vote in the meetings of a municipality.
o The members of the Lok Sabha and the state legislative assembly representing
constituencies that comprise wholly or partly the municipal area.
o The members of the Rajya Sabha and the state legislative council registered as electors
within the municipal area.
o The chairpersons of committees (other than wards committees).

 Article 243S: Constitution and composition of wards committees,

o It exists if the population of the municipality is 3 lakhs or more.
It consists of one or more wards,
The state legislature may make provisions concerning the composition and the territorial
area of a wards committee and how the seats in a wards committee shall be filled.
o Other Committees: The state legislature can make any provision for the constitution of
other committees.
o Ministries: Ministry of Housing and Urban Affairs, Defence in the case of cantonment
boards, Home Affairs in the case of Union Territories.

 Article 243T :Reservation of seats in Municipalities

Special provisions have been made for the representation of marginalised communities in the
urban local self-governments. This has been done to ensure that women, members of the
downtrodden castes, etc. also get the opportunity to have their voices heard.

Article 243T of the Indian Constitution gives the provisions for reservation of seats in the
municipalities for certain communities.

 Seats should be reserved for members of Scheduled Castes and Scheduled Tribes in the
municipality, in the same proportion which their population bears to the total population
of the locality.
 At least one-third of the above-mentioned seats should be reserved for women belonging
to Scheduled Castes and Scheduled Tribes.
 At least one-third of the total seats in the municipality should be reserved for women
(including the seats reserved under Clause 2).
  The offices of the Chairpersons shall be reserved for Scheduled Castes, Scheduled Tribes
and women as the Legislature decides.

An interesting case in the matter of reservation of seats is Saraswati Devi v. Smt.

Shanti Devi and Ors. (1997).

Saraswati Devi v. Smt. Shanti Devi and Ors. (1997)

Facts

In this case, the appellant and respondent were both women of Scheduled Castes elected to the
Municipal Committee in Loharu, Haryana. The appellant occupied the seat reserved for
Scheduled Castes while the respondent was elected in an unreserved seat. The office of the
President was to be, as per the State, filled by a Scheduled Caste person. Both the women wanted
to contest for this post but while the appellant was allowed to, the respondent was not, as she did
not occupy a reserved seat.

Judgement

The court held that as the respondent was elected as a member not on a reserved seat but a seat
for General category of women, she could not be included in the eligible Scheduled caste
candidates for Presidentship.

While she did belong to the Scheduled Caste category, she and the appellant were not in the
same category for the purpose of elections. Including her would mean that all the elected
members belonging to Scheduled Castes were in one category and thus, could contest for the
post of President, which would distort the reservation scheme given in Article 243T of the
Constitution of India.

Reservation of seats for Backward class of citizens

The Article also says that nothing in Part IX-A shall prevent the Legislature of a State from
making provisions for reservation of seats in a Municipality for citizens belonging to backward
classes. This means that the Legislature has the opportunity to take the existing reservation
provisions forward and extend them to backward classes if it feels the need to do so.

 Article 243U: Duration of Municipalities:

This article specifies the five-year term for municipalities, ensuring periodic elections and
democratic continuity in local governance.
  Fresh elections to constitute a municipality shall be completed
 Before the expiry of its duration of five years; or
 In case of dissolution, before the expiry of a period of six months from the date of its
dissolution.
 The municipality constituted upon the dissolution shall continue only for the remainder
of the period.
 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.
 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 concerning dissolution:
 A municipality must be given a reasonable opportunity of being heard before its
dissolution;
 No amendment of any law for the time being in force shall cause the dissolution of a
municipality before the expiry of the five-year term.

Kishan Singh Tomar v. Municipal Corporation of the City of Ahmedabad (2007)

The court acknowledged that Article 243U’s provision in this matter was given so as to prevent
mischief or delay in the election process. The State Election Commission needed to work
independently and with authority, and complete the elections before the expiration of the
duration of the current municipal corporation in Ahmedabad.

 Article 243V: Disqualification for Membership:

Disqualification of a member can be done on following grounds:

o if he is so disqualified by or under any law for the time being in force for the purposes of
elections to the Legislature of the State concerned.
o Provided that no person shall be disqualified on the ground that he is less than twenty-
five years of age, if he has attained the age of twenty-one years;
o If he is so disqualified by or under any law made by the Legislature of the State.

 Article 243W

As per Article 243W of the Constitution, the Legislature of the State endows its municipalities
with the authority to formulate plans for economic development and social justice in the locality
and to perform the functions entrusted to them which are necessary for the management of the
area.The main functions of a municipality include:
  Construction of buildings and regulation of land use
 Managing the water supply
 Protecting natural resources and regulating their use
 Ensuring public health and proper sanitation
 Construction of schools in the locality

 Article 243X: Powers to Impose Taxes by Municipalities:

This article empowers municipalities to levy taxes on properties, including buildings and lands
within their jurisdiction.However, the taxes imposed should not be beyond the permissible limits
defined by the state legislature. The Constitution provides that the State can take decisions to:

 Grant the requisite power to the municipality to levy taxes, tolls, and fees.
 Assign to the municipality some of the money collected by it in similar ways.
 Make grants to the municipality, or create funds for it.

 Article 243Y: Finance Commission:

Just like in the case of panchayats, the Constitution has provided for the creation of a Finance
Commission for municipalities by the Governor under Article 243Y. Enumerated below are the
main provisions of this Article.The Finance Commission appointed by the Governor shall review
the financial position of the municipality and make recommendations in two matters: how to
distribute the money between the state and the municipality, and how to improve the financial
position of the latter.

The Legislature would decide the composition of the Commission, the qualification of its
membership, as well as the powers it would hold.

 The Governor shall communicate all the recommendations made by the Commission to
the state as well as the measures it should take to implement them.
 Audit of Accounts of the Municipalities
 As per the Constitution of India (Article 243Z), State governments have the power to
determine who will audit the accounts of municipalities and what procedure will be
followed in their own states.
 Article 243 Z:Audit of Accounts of the Municipalities

As per the Constitution of India (Article 243Z), State governments have the power to determine
who will audit the accounts of municipalities and what procedure will be followed in their own
states.
  Article 243 ZA: Election to the Municipalities

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 (Article 243
K).The state legislature may make provisions with respect to all matters relating to elections to
the municipalities.State legislature decides upon nominated members in Municipalities.

 Article 243 ZB Committee for District Planning

Every state shall constitute, at the district level, a district planning committee to consolidate the
plans prepared by panchayats and municipalities in the district, and to prepare a draft
development plan for the district as a whole.Planning and allocation of resources at the district
level for the Panchayati Raj institutions are normally to be done by the Zila Parishad.

 Article 243 ZE Metropolitan Planning Committees

Every metropolitan area shall have a metropolitan planning committee to prepare a draft
development plan.

Continuance of Existing Laws and Municipalities

All the state laws relating to municipalities shall continue to be in force until the expiry of one year from the
commencement of this act.

In other words, the states have to adopt the new system of municipalities based on this act within the maximum
period of one year from 1 June 1993, which is the date of commencement of this act.

However, all municipalities existing immediately before the commencement of this act shall continue till the
expiry of their term, unless dissolved by the state legislature sooner.

Problem areas of Municipal Bodies

 Disqualifications of members of Municipal Bodies follow in principle the practice

followed in state legislature disqualifications. But since it is governed by the state
legislature who can make laws regarding the same,it is not consistent in all states and
that leads to a lot of disparity and non – security among members.
 Election expenses and code of conduct to be better regulated and more powers
should be given to the State election commission to do the same.
 The Municipal Councils/ Municipalities have restricted local autonomy as
compared to the Municipal Corporations; with more pervasive state control that often
climax in dissolution of the former.
 Lack of Finance due to reluctance of the state and central legislators not wanting to
divest further taxation and grants powers to them more than what they already have
for fear of loss of power. And the municipal bodies fear increasing tax or asking for
new tax collection options for loss of popularity among people.
 Local bodies are created by state governments and therefore can be dissolved by
them as well if not dancing as per their tunes.
 In addition to the above is the drawing of rural people and other city people to a place
where there is rapid urbanization through industrialization. Law and order becomes
difficult to maintain, slums develop etc. leading to additional problems for these
already stressed out urban local governance bodies.
 In spite of many central and state committees sitting and recommending better
financial and administrative autonomy for the Municipal bodies, there has been no
concrete effort from the legislator’s side to implement the same.
 The power now seems to have shifted from the state governments to the financial
institutions, international donors and credit rating agencies. Finally, the capacity of
the government to generate employment directly through anti-poverty programs
would remain limited. Thus anti-poverty programs should primarily be focused on
provision of basic amenities.
 Lack of consistent and coherent urban development policy, faulty and improper
urban planning coupled with poor implementation and regulation are big challenges
for municipalities.
 Lack of proper monitoring system in place results in inefficient and improper
functioning of Local Urban Bodies.
 Issues in decentralization As discussed in the earlier section on implementation of
the 74th Constitutional Amendment, states have incorporated provisions in their
Municipal Acts for transferring additional functions to the municipal body, but the
extent of functions transferred differs from state to state. Further, the performance of
Municipal Bodies in undertaking these functions varies from city to city even in the
same state
 Financial impediments The ULBs are financially weak, and while there is provision
to levy and collect adequate user,charges, such provisions are not fully utilized, Many
municipal bodies are running into deficits and are heavily dependant on government
grants. The state budgetary allocations have, however, been drying up for most states,
and it is being realized that the traditional system of funding based on plan and
budgetary allocations will only reduce in the future.
 Operational capacity issues Most ULBs face problems due to lack of capacity,
improper staffing patterns, and lack of standardization. They do not have the
institutional, operational, educational, and legal capability to develop commercially
viable infrastructure projects, mobilize resources for the projects, and implement
them
  Insufficient public participation The urban governance system lacks people’s
involvement in the decisionmaking process. While there is little effort on part of the
municipal bodies to include people in the process, the problem gets compounded by
the fact that there is very little awareness amongst citizens themselves on their role in
the governance process.
 Issues in transparency and accountability The lack of transparency and
accountability in the working of urban local bodies has already been brought out in
the earlier discussions on the Municipal Disclosure Law

MEASURES TO STRENGETHEN URBAN GOVERNANCE

The Planning Commission of India constituted a Working Group on Urban Governance for
formulation of 12th Five Year Plan. Some of the recommendations of the committee for
strengthening urban governance are as follows:

1) Standardizing the classification of ULBs: The states should adopt standard norms for
classification of ULBs. It would be advisable that all the municipalities should be
reclassified into three categories: Municipal 60 Democratic Decentralization Corporation
for large urban areas of 5 lakh and more population; Municipal Council for urban areas of
1 lakh to 5 lakh population and Nagar Panchayat for towns below 1 lakh population
2) Strengthening Ward Committees: There is wide variation in the functioning of ward
committees across the state. Although the legal provisions for the constitution of a Wards
Committees have been made in most of the states, the actual spirit of the Amendment is
diffused.
3) Strengthening Metropolitan Planning Committees: The 74th Amendment specific
establishment of a Metropolitan Planning Committee (MPC) for preparing development
plans at the metropolitan level. However, MPCs are yet to evolve as per the spirit of the
constitutional amendment. Only a few states have initiated creation of such entities. The
central government needs to support the state government in this respect
4) Empowerment of political office bearers: The Mayors or Chairpersons of the LBs
should be accountable to people and need to have power and tenure commensurate with
this objective.
5) Convergence of functions of parastatals / state bodies with Local Bodies:
Historically, due to poor staffing and technical capabilities of the Local Bodies, a number
of Para-Statal Bodies were created for providing services listed in the 12th Schedule
Consequently, a large number of parastatals, including Development Authorities, Water
Supply & Sewerage Boards, Slum Housing & Development Boards, PWD etc. have been
performing various functions which could have been vested with the Local Bodies in
accordance with the mandate of the 74th Amendment.
6) Framework for Governance of Mega Cities: The problems of megacities are
admittedly complex. The large scales of interventions required for core services such as
water supply, sanitation and roads, leads to formidable administrative challenges
7) Strengthening the Organisational Capacities: The poor quality of urban managers is
one of the major reasons for sub optimal urban administration. Local Self Government
and Urban Local Bodies The manpower available in most of the urban local bodies is not
equipped with the necessary technical and planning skills to meet the growing urban
challenges.
8) Regulatory mechanisms for delivery of basic urban services: An Independent Urban
service Regulator is the need of the hour as the current paradigm of service provider
deciding service levels and tariff is outdated. The regulator would monitor provision of
service as well as tariff regime and ensure transparency and efficiency.
9) Public Private Partnership: PPPs which are structured around a robust revenue model
(including user charges, targeted subsidies, and viability gap funding) and offer a good
prospect of return on investment can contribute to systemic gains and better management
of urban services. The State governments should bring out a legislative framework to
address the entire gamut of issues in implementation of PPP Projects and develop clear
policies with regard to identification of projects which can be developed and
implemented on PPP basis, delivery processes, project development, approval and
implementation process, guiding principles of contract management etc.
10) Accountability and Citizen Participation: A more interactive and participative
framework should be followed by ULBs to ensure greater accountability to the citizens.
Citizen Report cards, like the one prepared by the Public Affairs centre in Bengaluru,
need to be replicated across all cities.
11) Use of E-Governance and Technology for improvement of delivery of services and
need for database: The information Technology (IT) can play an important role in
improving governance. With municipal administration becoming increasingly complex,
the benefits of IT adoption are becoming more and more visible across several
municipalities.
 Panchayati Raj Act,1993

INTRODUCTION
Rural development is one of the main objectives of Panchayati Raj and this has been
established in all states of India except Nagaland, Meghalaya and Mizoram, in all Union
Territories except Delhi. and certain other areas. These areas include:

 The scheduled areas and the tribal areas in the states

 The hill area of Manipur for which a district council exists and
 Darjeeling district of West Bengal for which Darjeeling Gorkha Hill Council
exists
Evolution of Panchayati Raj
 The Panchayati system in India is not purely a post-independence phenomenon.
 In fact, the dominant political institution in rural India has been the village
panchayat for centuries.
 In ancient India, panchayats were usually elected councils with executive and
judicial powers.
 Foreign domination, especially Mughal and British, and the natural and forced
socio-economic changes had undermined the importance of the village
panchayats.
 In the pre-independence period, however, the panchayats were instruments for the
dominance of the upper castes over the rest of the village, which furthered the
divide based on either the socio-economic status or the caste hierarchy.
 The evolution of the Panchayati Raj System, however, got a fillip after the
attainment of independence after the drafting of the Constitution.
 The Constitution of India in Article 40 enjoined: “The state shall take steps to
organise village panchayats and endow them with such powers and authority as
may be necessary to enable them to function as units of self-government”.
 There were a number of committees appointed by the Government of India to
study the implementation of self-government at the rural level and also
recommend steps in achieving this goal.

The committees appointed are as follows:

Balwant Rai Mehta Committee

Ashok Mehta Committee
G V K Rao Committee
L M Singhvi Committee
  Balwant Rai Mehta Committee & Panchayati Raj
The committee was appointed in 1957, to examine and suggest measures for better
working of the Community Development Programme and the National Extension
Service. The committee suggested the establishment of a democratic decentralised local
government which came to be known as the Panchayati Raj.

Recommendations by the Committee:

o Three-tier Panchayati Raj system: Gram Panchayat, Panchayat Samiti and Zila
Parishad.
o Directly elected representatives to constitute the gram panchayat and indirectly
elected representatives to constitute the Panchayat Samiti and Zila Parishad.
o Planning and development are the primary objectives of the Panchayati Raj
system.
o Panchayat Samiti should be the executive body and Zila Parishad will act as the
advisory and supervisory body.
o District Collector to be made the chairman of the Zila Parishad.
o It also requested for provisioning resources so as to help them discharge their
duties and responsibilities.
The Balwant Rai Mehta Committee further revitalised the development of panchayats in
the country, the report recommended that the Panchayati Raj institutions can play a
substantial role in community development programmes throughout the country. The
objective of the Panchayats thus was the democratic decentralisation through the
effective participation of locals with the help of well-planned programmes. Even the then
Prime Minister of India, Pandit Jawaharlal Nehru, defended the panchayat system by
saying, “. . . authority and power must be given to the people in the villages …. Let us
give power to the panchayats.”

 Ashok Mehta Committee & Panchayati Raj

The committee was appointed in 1977 to suggest measures to revive and strengthen the
declining Panchayati Raj system in India.
The key recommendations are:

o The three-tier system should be replaced with a two-tier system: Zila Parishad
(district level) and the Mandal Panchayat (a group of villages).
o District level as the first level of supervision after the state level.
o Zila Parishad should be the executive body and responsible for planning at the
district level.
 o The institutions (Zila Parishad and the Mandal Panchayat) to have compulsory
taxation powers to mobilise their own financial resources.
 G V K Rao Committee & Panchayati Raj
The committee was appointed by the planning commission in 1985. It recognised that
development was not seen at the grassroot level due to bureaucratisation resulting in
Panchayat Raj institutions being addressed as ‘grass without roots’. Hence, it made some
key recommendations which are as follows:

o Zila Parishad to be the most important body in the scheme of democratic

decentralisation. Zila Parishad to be the principal body to manage the
developmental programmes at the district level.
o The district and the lower levels of the Panchayati Raj system to be assigned with
specific planning, implementation and monitoring of the rural developmental
programmes.
o Post of District Development Commissioner to be created. He will be the chief
executive officer of the Zila Parishad.
o Elections to the levels of Panchayati Raj systems should be held regularly.

 L M Singhvi Committee & Panchayati Raj

The committee was appointed by the Government of India in 1986 with the main
objective to recommend steps to revitalise the Panchayati Raj systems for democracy and
development. The following recommendations were made by the committee:

o The committee recommended that the Panchayati Raj systems should be

constitutionally recognised. It also recommended constitutional provisions to
recognise free and fair elections for the Panchayati Raj systems.
o The committee recommended reorganisation of villages to make the gram
panchayat more viable.
o It recommended that village panchayats should have more finances for their
activities.
o Judicial tribunals to be set up in each state to adjudicate matters relating to the
elections to the Panchayati Raj institutions and other matters relating to their
functioning.
All these things further the argument that panchayats can be very effective in identifying
and solving local problems, involve the people in the villages in the developmental
activities, improve the communication between different levels at which politics operates,
develop leadership skills and in short help the basic development in the states without
making too many structural changes. Rajasthan and Andhra Pradesh were the first to
adopt Panchayati raj in 1959, other states followed them later.
 73rd Constitutional Amendment Act of 1992
Significance of the Act

 The Act added Part IX to the Constitution, “The Panchayats” and also added the
Eleventh Schedule which consists of the 29 functional items of the panchayats.
 Part IX of the Constitution contains Article 243 to Article 243 O.
 The Amendment Act provides shape to Article 40 of the Constitution, (directive
principles of state policy), which directs the state to organise the village
panchayats and provide them powers and authority so that they can function as
self-government.
 With the Act, Panchayati Raj systems come under the purview of the justiciable
part of the Constitution and mandates states to adopt the system. Further, the
election process in the Panchayati Raj institutions will be held independent of the
state government’s will.
 The Act has two parts: compulsory and voluntary. Compulsory provisions must
be added to state laws, which includes the creation of the new Panchayati Raj
systems. Voluntary provisions, on the other hand, is the discretion of the state
government.
 The Act is a very significant step in creating democratic institutions at the
grassroots level in the country. The Act has transformed the representative
democracy into participatory democracy.

SALIENT FEATURES OF THE ACT

 Gram Sabha: Gram Sabha is the primary body of the Panchayati Raj system. It is a
village assembly consisting of all the registered voters within the area of the panchayat. It
will exercise powers and perform such functions as determined by the state legislature.
Candidates can refer to the functions of gram panchayat and gram panchayat work, on the
government official website – https://grammanchitra.gov.in/.
 Three-tier system: The Act provides for the establishment of the three-tier system of
Panchayati Raj in the states (village, intermediate and district level). States with a
population of less than 20 lakhs may not constitute the intermediate level.
 Election of members and chairperson: The members to all the levels of the Panchayati
Raj are elected directly and the chairpersons to the intermediate and the district level are
elected indirectly from the elected members and at the village level the Chairperson is
elected as determined by the state government.
 Reservation of seats:
 For SC and ST: Reservation to be provided at all the three tiers in accordance with their
population percentage.
For women: Not less than one-third of the total number of seats to be reserved for
women, further not less than one-third of the total number of offices for chairperson at all
levels of the panchayat to be reserved for women.
The state legislatures are also given the provision to decide on the reservation of seats in
any level of panchayat or office of chairperson in favour of backward classes.
 Duration of Panchayat: The Act provides for a five-year term of office to all the levels
of the panchayat. However, the panchayat can be dissolved before the completion of its
term. But fresh elections to constitute the new panchayat shall be completed –
before the expiry of its five-year duration.in case of dissolution, before the expiry of a
period of six months from the date of its dissolution.
 Disqualification: A person shall be disqualified for being chosen as or for being a
member of panchayat if he is so disqualified –
Under any law for the time being in force for the purpose of elections to the legislature of
the state concerned..
 State election commission:The commission is responsible for superintendence, direction
and control of the preparation of electoral rolls and conducting elections for the
panchayat.
The state legislature may make provisions with respect to all matters relating to elections
to the panchayats.
 Powers and Functions: The state legislature may endow the Panchayats 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 related to Gram Panchayat work
with respect to:
 the preparation of plans for economic development and social justice.
 the implementation of schemes for economic development and social justice as
may be entrusted to them, including those in relation to the 29 matters listed in the
Eleventh Schedule.
 Finances: The state legislature may –
 Authorize a panchayat to levy, collect and appropriate taxes, duties, tolls and fees.
 Assign to a panchayat taxes, duties, tolls and fees levied and collected by the state
government.
 Provide for making grants-in-aid to the panchayats from the consolidated fund of
the state.
 Provide for the constitution of funds for crediting all money of the panchayats.
 Finance Commission: The state finance commission reviews the financial position of
the panchayats and provides recommendations for the necessary steps to be taken to
supplement resources to the panchayat.
Audit of Accounts: State legislature may make provisions for the maintenance and audit
of panchayat accounts.
  Application to Union Territories: The President may direct the provisions of the Act to
be applied on any union territory subject to exceptions and modifications he specifies.
Exempted states and areas: The Act does not apply to the states of Nagaland, Meghalaya
and Mizoram and certain other areas. These areas include,
 The scheduled areas and the tribal areas in the states
 The hill area of Manipur for which a district council exists
 Darjeeling district of West Bengal for which Darjeeling Gorkha Hill Council
exists.
.
 Continuance of existing law: All the state laws relating to panchayats shall continue to
be in force until the expiry of one year from the commencement of this Act. In other
words, the states have to adopt the new Panchayati raj system based on this Act within
the maximum period of one year from 24 April 1993, which was the date of the
commencement of this Act. However, all the Panchayats existing immediately before the
commencement of the Act shall continue till the expiry of their term, unless dissolved by
the state legislature sooner.
PESA Act of 1996
The provisions of Part IX are not applicable to the Fifth Schedule areas. The Parliament
can extend this Part to such areas with modifications and exceptions as it may specify.
Under these provisions, Parliament enacted Provisions of the Panchayats (Extension to
the Scheduled Areas) Act, popularly known as PESA Act or the extension act.

Objectives of the PESA Act:

 To extend the provisions of Part IX to the scheduled areas.
 To provide self-rule for the tribal population.
 To have village governance with participatory democracy.
 To evolve participatory governance consistent with the traditional practices.
 To preserve and safeguard traditions and customs of tribal population.
 To empower panchayats with powers conducive to tribal requirements.
 To prevent panchayats at a higher level from assuming powers and authority of
panchayats at a lower level.

Panchayati Raj System’s Power and Functions

Panchayat Raj system functions are the functions that all Panchayati Raj institutions perform; the
functions which they perform are related to Panchayati Raj as specified in state laws. Panchayat
Raj system functions are of two types; these are obligatory functions which means compulsory
and the other one is an optional function, some states follow these functions of Gram Panchayat
and the other states do not follow. The optional function may or may not be performed by the
Panchayat, it depends on the resources a Panchayat is having. Such Panchayat Raj system
functions are optional functions These are –

 Setting up of breeding centres for cattle

 Promotion of agriculture
 Tree plantation on roadside
 Organising child and maternity welfare
 The obligatory or compulsory functions of the Panchayat Raj system functions are –
 Primary healthcare
 Constructing public wells
 Public toilet and lavatories
 Social health and primary and adult education
 Minor irrigation
 Vaccination
 The supply of drinking water
 Rural electrification
 Cleaning of Public Roads
 Sanitation
 The scope of functions of Gram Panchayat was widened after the 73rd Amendment of the
constitution. The programs that are expected to be performed by the Panchayats are –
 Relief in natural calamities
 Preparation of annual development plan for Panchayat area
 Implementation and monitoring of poverty alleviation programs
 Annual budget
 Removal of encroachment on public lands

In some states, Gram Panchayat also performs the programs and activities like Gram Sabhas,
non-conventional energy sources, biogas plants, public distribution system improved Chulhas,
etc.

PANCHAYAT-COMPOSITION, POWER, RESPONSIBILITIES

INTRODUCTION

Introduction

The Central government cannot oversee the minute workings of all the smallest units in the
country. Therefore, one of the salient features of a good representative government is the
percolation of the self-rule mechanism to the grassroots level, leading to more effective decision-
making and greater accountability. Keeping this in mind, our Constitution has provided for the
creation of panchayats, municipalities and cooperative societies to manage the affairs of the
villages and urban localities in India.

Panchayats

 The first Panchayati system (called “Panchayati Raj”) came up in Nagaur city of
Rajasthan in 1959 as per the recommendations of the Balwant Rai Committee.
 This Committee did far-reaching work in the area of rural democracy, which brought
Balwant Rai the title of “Father of Panchayati Raj.” Gradually, this system was adopted
by other states like Andhra Pradesh and Maharashtra.
 However, the Constitution did not lay an obligation upon governments to constitute
panchayats.
 Article 40 only provided a Directive Principle of State Policy that said the State should
organise village panchayats and give them the necessary powers and authority to
function, but this was not mandatory.

Gram Sabha - Article 243(b)

 The very basic unit of the Panchayati system is the Gram Sabha. It has been defined by
Article 243(b) of the Constitution as the body of all the persons registered on the electoral
rolls of a village.
 This permanent body is the body of the electorate. This means that all other institutions –
Gram Panchayat, Zilla Parishad, etc. (which we will be talking about later) – are elected
by the Gram Sabha. Moreover, the Gram Sabha acts as a forum where people can discuss
matters of governance and development.
 Therefore, Gram Sabha is the primary and fundamental component of the local self-
government system. However, the extent of its powers depends upon the policy of the
state in which the village is located, as mentioned in Article 243A.
 The membership of a Gram Sabha is restricted to persons above the age of 18 living in
that village. This is done so that the best decisions, which are in line with the interests of
the village, can be made.
 We now move on to the self-government body that is elected by the Gram Sabha – the

Constitution of Panchayats Article 243(d

Under Article 243(d) of the Indian Constitution, ‘panchayat’ has been defined as an institution of
self-government in rural areas.
Article 243B provides for the establishment of a three-tier Panchayati system:

 At the village level i.e. Gram Panchayat

 At the intermediate level i.e. Panchayat Samiti
 At the district level i.e. Zila Parishad

 Gram Panchayat

Gram Panchayat is the lowest level in the panchayat pyramid system. Each village is divided into
even smaller units called wards, each of which selects a representative of its own. They are
called Ward members or the Panch. The Gram Sabha also elects the head of the Gram Panchayat,
called the Sarpanch. Therefore, the Sarpanch and the Panch together make up the Gram
Panchayat.

The main work of the Gram Panchayat is to take care of social issues, construct and maintain
schools, roads and drainage facilities, etc., and to levy and collect local taxes..

 Panchayat Samiti

The Panchayat Samiti is the next level in the hierarchy. It oversees the working of the Gram
Panchayats of all the villages located in the block under its jurisdiction.

The Panchayat Samiti is headed by the Pradhan. He or she is elected by a group consisting of all
the members of the Panchayat Samiti as well as all the Panchs of the Gram Panchayats coming
under it.

 Zila Parishad

Also known as District Panchayat, this is the highest level of panchayat in the hierarchy of rural
self-government. It oversees the working of the Panchayat Samitis of all the blocks in the district
of its jurisdiction, as well as all the Gram Panchayats under them. Moreover, it controls the
distribution of funds among all the Gram Panchayats. It is responsible for making developmental
plans at the district level.

The Zila Parishad is headed by the Chairman. It also has a Chief Executive Officer as a member,
who is elected by the State government.

Composition of Panchayats - Article 243C

  All the members of the three levels in the panchayat hierarchy are elected by the eligible
voters living in the area. However, the state can also make provisions for the
representation of Members of Legislative Assembly (MLAs) or other officials in the
panchayat. As for the rules regarding the composition of the panchayats, they have been
taken care of by the Drafters under Article 243C of the Constitution.
 A large number of panchayats are constituted in a single state. It is preferable that the
ratio between the population and territory under one panchayat and the number of seats in
it be the same throughout the state.
 Each area having a single panchayat is divided into constituencies for the purpose of
conducting elections. It is also desirable that the ratio between the population of each
constituency and the number of seats allotted to it be the same throughout the panchayat
area.

Reservation of seats in Panchayats- Article 243D

The Drafters of our Constitution were aware of the reality of the rampant discrimination in India
at the time of independence – which, unfortunately, has not completely died down even today.
Keeping that in mind, they made special provisions for the representation of marginalised
communities in the local self-government too. This was done to ensure that women, members of
the downtrodden castes, etc. in the rural areas also get the opportunity to have their voices heard.

Article 243D of the Indian Constitution gives the provisions for reservation of seats in the
panchayats for certain communities. They have been briefly described below.

 Seats should be reserved for members of Scheduled Castes and Scheduled Tribes in the
panchayat, in the same proportion which their population bears to the total population of
the village.
 At least one-third of the above-mentioned seats should be reserved for women belonging
to Scheduled Castes and Scheduled Tribes.
 At least one-third of the total seats in the panchayat should be reserved for women
(including the seats reserved under Clause 2).

Duration of Panchayats - Article 243E

The Constitution has specified the exact duration of operation of a panchayat in Article 243E. It
states that every panchayat shall continue to be in force for a period of 5 years unless it is
dissolved earlier by any law.It also says that election to a panchayat should be completed before
its expiry or 6 months before its dissolution.

Disqualifications for Membership- Article 243F

A person can be disqualified from the membership of the panchayat in certain situations. As per
Article 243F of the Constitution, this can happen when the person has been disqualified from
membership of the Legislature of the Union or the State because of any reason, or if he has been
specifically disqualified from membership of the panchayat by any law.

If a question arises regarding the disqualification of membership of any person, then it will be
solved by the authority and by the process which the Legislature decides.

Bhanumati Etc. v. State of U.P. (2010)

Facts: In this case, a no-confidence motion was passed against the Chairman of a Zila Parishad
under the U.P. Panchayat Laws (Amendment) Act, 2007. She challenged it on the grounds that a
provision for no-confidence motion could not be made under the statute as it was not mentioned
in the Constitution.

Judgement-The court dismissed the appeal, saying that the Constitution grants the State the
power to fixate specific rules regarding election and membership. Therefore, the no-confidence
motion was sustained.Thus, this case is an example of the membership of a person to a Zila
Parishad being under threat of disqualification under existing State law, and how the court
upheld that motion.

Powers, Authority and Responsibility of Panchayats - Article 243G

Panchayats have the power to prepare the plans and schemes for economic development and
promotion of social justice in the village. They are responsible for preparing practical and well-
thought-out plans which will enable the furtherance of the interests of the villagers. As per
Article 243G, it is the State which determines the specific scope and extent of the powers of the
panchayat in the above matters.

Some major functions of a panchayat are as follows:

 Providing necessary facilities like sanitation and medical assistance, schools, irrigation,
roads, drinking water, etc.
 Making annual developmental plans for the area and preparing schemes for more
scientific agriculture, employment generation, etc.
 Making the annual budget and managing the finances of the area.
 Implementing and coordinating schemes launched by the Central and State governments,
like the Public Distribution System.

Powers to impose Taxes and Funds of Panchayats

Clearly, there are a lot of functions that a panchayat has to perform. And as we know, nothing in
this world is free; to do anything, we need monetary resources. Where, then, do the monetary
resources of the panchayats come from?

All of us pay taxes to the government on our incomes and expenditures. This acts as a source of
revenue for the government. Some of these funds are appropriated to the panchayats. Also, in the
same way as the government, panchayats too collect their own taxes, tolls, and fees from the
people to keep their gears running smoothly.

Article 243H mentions that the State can take decisions to:

 Grant the requisite power to the panchayat to levy taxes, tolls, and fees.
 Assign to the panchayat some of the money collected by it in similar ways.
 Make grants to the panchayat, or create funds for it.

Finance Commission- Article 243I

To make the above-discussed process of mobilisation of funds for the panchayats easier, the
Constitution has provided for the creation of a Finance Commission by the Governor under
Article 243I. Enumerated below are the main provisions of this Article.

 The Finance Commission appointed by the Governor would review the financial position
of the panchayat and make recommendations in two matters: how to distribute the money
between the state and the panchayat, and how to improve the financial position of the
latter.
 The Legislature would decide the composition of the Commission, the qualification of its
membership, as well as the powers it would hold.
 The Governor shall communicate all the recommendations made by the Commission to
the state as well as the measures it should take to implement them.

Audit of Accounts of Panchayats - Article 243J

As per the Constitution of India (Article 243J), State governments have the power to determine
who will audit the accounts of panchayats and what procedure will be followed in their own
states.

Election to the Panchayats - Article 243K

The provision for an election to panchayats has been enshrined in Article 243K of the Indian
Constitution. It says that the Panchayat elections are to be conducted and overseen by the State
Election Commissions. Therefore, the election rules can vary from state-to-state.

Application of this Part to Union Territories

The Constitution states that the provisions related to panchayats shall apply to Union Territories
in the same way as in the case of the states, but the President may, by public notification, make
any modifications in this provision.

STATE FINANCE COMMISSION

INTRODUCTION

In a federal setup, along with the balancing of functions and powers, there is a crucial issue of
distribution of financial resources between the Union and other units of government. As the local
bodies have meagre resources of their own, therefore they have to depend on devolution of funds
from the central and state governments. It has been observed that they rely more on fiscal
transfers from the state government in the form of shared taxes and grants

Article 243-I of the Indian Constitution prescribes that the Governor of a State shall, as soon as
may be within one year from the commencement of the Constitution (Seventy-third Amendment)
Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission
to review the financial position of the Panchayats and to make recommendations to the
Governor.

State Finance Commission (SFC) is a constitutional body established by the 73rd and 74th
Constitutional Amendment Acts of 1992. It advises that funding be transferred from the State
Government to Panchayati Raj Institutions, as well as ideas for increasing their resources. Article
243-Y places municipalities and city councils under the jurisdiction of the State Finance
Commission

STATE FINANCE COMMISSION

 The governor of a state is mandated by Article 243-I of the Indian Constitution to form a
Finance Commission every five years.
 The Governor must bring every proposal of the State Finance Commission and
subsequent action taken by the State Government to the State Assembly.
 A State Finance Commission performs comparable tasks to the Central Finance
Commission.
  It allocates state resources to Panchayati Raj institutions at all three levels in the form of
taxes, charges, and levies to be collected by the state and local governments.
 Its function is comparable to that of the Central Finance Commission, which is appointed
by the President of India under Article 280 of the Constitution and is responsible for
allocating central taxes between the Union and state governments.

ORIGIN AND SIGNIFICANCE

Local bodies, rural as well as urban, have been accepted for having a great role in the social,
economic and political development. However, on account of various reasons such as rapid
population growth, urbanisation, poverty, and lack of proper devolution of financial resources,
the local governments have been subjected to heavy financial strains.

 The Local bodies heavily depend on the state governments in matter of grants. In this
context, sources of revenue assigned to the local bodies are generally insufficient
 . In order to rectify these shortcomings; and check the financial imbalance, a number of
suggestions have been put forward by various commissions and committees.
 One of the important suggestions has been to setup a Finance Commission for every state
on the pattern of Central Finance Commission. It was suggested that on the pattern at the
national level there should be a system of appointment of State Finance Commission,
which should recommend a pattern of distribution of sources of income between the state
government and local bodies.
 The Seventy Fourth Constitutional Amendment Act in the statement of its objectives
observed, “In many States, local bodies have become weak and ineffective on account of
a variety of reasons, including the failure to hold regular elections, prolonged
supersession and inadequate devolution of powers and functions.
 As a result, Urban Local Bodies are not able to perform effectively as the vibrant
democratic units of selfgovernment”

WHO APPOINTS THE STATE FINANCE COMMISSION?

 The Governor of a State appoints a Finance Commission, every five years in

accordance with Article 243-I of the Indian Constitution.
 Every recommendation of the State Finance Commission and subsequent action taken
by the State Government must be brought before the State legislature by the
Governor.

COMPOSITION
The composition of the State Finance Commission is outlined in Article 243-I of the Indian
Constitution. Generally, an SFC comprises:

 Chairperson: A person with experience in public affairs or finance, appointed by the

Governor.
 Members: Individuals with knowledge and experience in finance, taxation, or local
government matters. The Governor appoints the members in consultation with the state's
Governor and the State Finance Minister.
 Ex-officio Members: The Finance Secretary and the State Development Commissioner
serve as ex-officio members, providing technical expertise to the commission.
 Qualifications for Chairman/Members:
Some of the states have clearly specified the qualifications/conditions for the
appointment of Chairman and members, while in other states there is no such
specification. In Punjab, the person to be appointed as Chairman of the Finance
Commission is required to have an experience in public affairs; and the persons to be
appointed as Members thereof are required to have:
 special knowledge and experience in economic and financial matters regarding
Panchayats; or
 special knowledge and experience in economic and financial matters regarding
Municipalities;
 or wide experience in financial matters, and administration; or
 special knowledge of economics.
 Disqualification: A person may be disqualified for being appointed as Member or for
being a Member of the Finance Commission, if:
 s/he is of unsound mind; s/he is an undercharged insolvent;
 s/he has been convicted of an offence, which involves moral turpitude;
 s/he has such financial or any other interest, as is likely to affect prejudicially
her/ his functions as a Member of the State Finance Commission.
 Term of Members: Every member of the State Finance Commission holds office for
such period as may be specified in order of the Governor appointing her/him as such but
shall be eligible for reappointment, provided that s/he may, by a letter addressed to the
Governor, resign her/his office, at any time prior to the period specified in her/his
appointment letter.
 Conditions of Service: The Chairman and Members of the Finance Commission may
render whole time or part time service to the State Finance Commission as the Governor
may in each case specify; and they shall be paid fees or salaries and such allowances as
the State Government may prescribe from time to time.

THE FUNCTIONS of the State Public Commission are as Follows:

  Taking such steps that help in boosting the financial condition of the various municipal
bodies and Panchayati raj institutions in the state
 Acting as an arbiter between the central and the state governments with regard to issues
that are of financial nature
 Transferring funds that are granted by the central government to the state government
 Distribution of Revenue: The primary function of the SFC is to recommend the
distribution of net proceeds of taxes, duties, tolls, and fees levied by the state government
between itself and local bodies. This ensures a fair and just allocation of financial
resources.
 Grant-in-Aid: The commission recommends the quantum of grants to be given to local
bodies, considering their financial needs and capabilities. This enhances the capacity of
local institutions to provide essential services.
 Review of Financial Position: Regularly reviewing the financial position of Panchayats
and Municipalities allows the SFC to identify areas that require attention, whether in
revenue generation, financial management, or debt reduction.
 Ensuring Equitable Distribution: The SFC plays a crucial role in ensuring that the
distribution of financial resources is equitable, avoiding concentration in specific regions
and promoting balanced development across the state.
 Encouraging Local Governance: By recommending fiscal measures such as taxes and
fees, the SFC fosters financial autonomy for local bodies. This encourages local
governance units to take charge of their economic development.
 Monitoring Fiscal Discipline: The commission monitors the fiscal discipline of local
bodies, ensuring that they adhere to financial norms and guidelines. This contributes to
overall financial stability and accountability.

Powers of State Finance Commission

1. Determination of Financial Devolution: The SFC has the authority to determine the
principles for sharing the state's revenue with local bodies. This includes specifying the
share of taxes, duties, tolls, and fees that should be assigned to Panchayats and
Municipalities.
2. Grant-in-Aid: The commission recommends the amount of grant-in-aid to be provided
to local bodies from the state's consolidated fund. This is crucial for strengthening the
financial base of local governance institutions.
3. Review of Financial Position: The SFC assesses the financial position of Panchayats
and Municipalities, considering factors like revenue generation, expenditure patterns, and
 debt levels. This review informs the recommendations for fiscal consolidation and
stability.
4. Recommendations on Taxes and Fees: The commission suggests measures to augment
the financial resources of local bodies, including recommendations on the imposition of
taxes, tolls, and fees within the limits prescribed by the state legislature.
5. Fiscal Transfers: The SFC examines the need for, and modalities of, fiscal transfers
between the state government and local bodies, ensuring a fair and equitable distribution
of resources.
6. Has all the powers of a Civil Court under the code of Civil Procedure, 1908 while
trying a suit in respect of the following matters, namely: Summoning and enforcing the
attendance of witnesses;

 Requiring the production of any document; and

 Requisitioning any public record from any court or office.

LIMITATIONS

 The composition of the State Finance Commission is a major concern. It is dominated

mostly by the bureaucrats rather than academics and specialists.

 The SFCs have a critical data reliability issue. Because local governments lack a solid
budgeting framework, they have difficulties gathering data and, as a result, analysing the
financial status of the local government.

 Many states have observed a disparity in the money transfers between State
Government to local governments and the State Finance Commission's recommendations.

 Local governments and SFCs are regarded to be less constitutionally protected than the
Union Finance Commission.
  The XIth and XIIth Finance Commissions have expressed dissatisfaction with the
majority of State Finance Commissions' performance.

Measures Need to be Taken for State Finance Commission:

To strengthen the State Finance Commission, various measures need to be taken. The 6th report
of the 2nd ARC also states some steps. These are

 The states should periodically constitute State Finance Commission, in line with
Constitutional requirements.

 To support cooperative federalism and deepen participatory democracy, the SFCs must
be strengthened urgently.

 Implementation of recommendations of SFCs by the state government must be ensured.

 State Finance Commissions should not just be composed of bureaucrats, but also include
members of intellectual civil society and professors.

 It is crucial to acknowledge the functions of SFCs and it should not be seen as inferior
when compared to the Central Finance Commission.

Positives facts about States Finance Commission:

• Enhanced the idea of democracy

• Greater devolutionary aspects of the government and governance.

• Empowerment of local people and local leaders.

• Efficient and timely accessibility of funds to remote corners

Negatives Facts about States Finance Commission:

• States are too reluctant to let loose their financial authority

• Too much of interference and encroachment in the autonomy and working of State Finance
Commission

• States themselves do not have ample funds at their disposal; hence even sharing that meagre
amount is always resisted by the state government.

• The idea of State Finance Commission has not has not been implemented in true spirit

The majority of states should recognize the significance of this institution in terms of its ability
to further the democratic decentralization process.

WARD COMMITTEE AND ITS FUNCTIONS:

INTRODUCTION

A Ward Committee has been chosen or appointed to represent a certain area within a
municipality or city. It is prominent in urban and municipal areas. It serves as an interface
between those who live nearby and the wider municipal government. Politicians who have been
elected, municipal authorities, and even government workers frequently belong to these
organizations. Residents can take advantage of this to discuss their needs, interests, and goals
with the local government.

What is a Ward?

Within a municipality, city, or other similar administrative region, a “ward” denotes a particular
geographic or administrative subdivision. They are separated based on a variety of criteria,
including population density, geographic limitations, and local differences. The “ward
counselor”, who represents each ward, is a locally elected official or council member who is in
charge of representing the needs and interests of the people who live in that ward. Wards play a
crucial role in ensuring that local governance, as well as decision-making processes, are better
suited to the unique requirements and characteristics of various areas or divisions within a
municipality.

What is a Ward Committee?

A Ward Committee is a type of local government created to encourage community involvement,

decentralize decision-making, and respond to local development needs within an identified
geographic region known as a “ward.” Basically, they act as an interface between the counselor
and the community and are crucial to the functioning of local government. On any matter
affecting its ward, a ward committee may make suggestions to the ward counselor, the municipal
council, the executive board, or the support committee.

Section 164-of the Panchayat Raj Act refers to the Sub- Committees & WardCommittees.

Every Panchayat shall have sub-committees and ward committees toassist the standing
committees or functional committees for the execution of anywork, shceme, project or plan wich
may consist of members of the panchayatand others interested in public welfare who may be
nominated by thepanchayat. Village panchayat may constitute Ward committees for
eachconstituency with the members of the constituency and other local inhabitantswho may be
nominated by the village panchayat to study and report on theneeds of the constituency.

Article-243S. Constitution and composition of Wards Committees, etc.

(1)There shall be constituted Wards Committees, consisting of one or more wards, within the
territorial area of a Municipality having a population of three lakhs or more.

(2) The Legislature of a State may, by law, make provision with respect to-

(a) the composition and the territorial area of a Wards Committee;

(b) the manner in which the seats in a Wards Committee shall be filled.

(3) A member of a Municipality representing a ward within the territorial area of the Wards
Committee shall be a member of that Committee.

(4) Where a Wards Committee consists of-

(a) one ward, the member representing that ward in the Municipality; or

(b) two or more wards, one of the members representing such wards in the Municipality elected
by the members of the Wards Committee,

shall be the Chairperson of that Committee.

(5) Nothing in this article shall be deemed to prevent the Legislature of a State from making any
provision for the constitution of Committees in addition to the Wards Committees.

Composition of a Ward Committee

 1) Ward Counselor: The Ward Committee’s chair frequently serves as the Ward
Counselor. They are an elected official charged with representing the ward’s interests
before the municipal council. They act as a point of contact for the Ward Committee and
the neighborhood management.
2) Community Representatives: Ward Committees frequently have representatives from
the local community who live in the ward. These people are chosen or put forth by the
community to serve on the committee. They are not elected authorities.
3) Local Government Officials: People, especially volunteers from local government like
the municipal manager or urban planner can join the Ward Committee. They can also
serve as the advisor on the committee.
4) Youth and Student Representatives: It may include representatives from nearby
schools, colleges, or any youth organizations to give an idea about the needs and goals of
young people. Also, it is practiced to involve younger members of the community in the
committees.
5) Elder Leaders: Elders may be requested to join ward committees in some communities
as they can give valuable advice based on their expertise and local knowledge.
6) Municipal Officials: The meetings can include officials from the local municipality,
such as the mayor’s office or various municipal agencies.

Ward Committee Members

 Ward committee members are individuals who serve on a committee at the ward level of
local government or municipal governance.
 The specific roles and responsibilities of ward committee members can vary depending
on the country, state, or region, as local government structures differ worldwide.
 However, the general purpose of ward committees is to promote community engagement,
facilitate communication between residents and local government authorities, and address
local issues and concerns.

Functions of Ward Committee

 Environmental and social initiatives: These are things that committees can start or
support in the ward, together with hygienic campaigns and social development initiatives.
 Local Development Planning: Ward Committees frequently participate in local
development planning. They take part in the establishment of development plans,
initiatives, and regulations according to the requirements of the ward.
 Budget Allocation: Ward Committees are responsible for budget allocation. The budget
is allocated, depending on the structure of local governance.
  Information Interface: Ward Committees frequently act as an interface for the local
administration to communicate information to the community. They make sure locals are
informed about government activities, policies, and programmes.
 Monitoring and evaluation: They keep track on the development and results of
community campaigns and government initiatives.
 Conflict Resolution: Ward Committees can act as mediators in settling disagreements
and conflicts within the neighborhood.
 Advocacy: They represent the ward’s interests at the municipal level through advocacy.
This involves arguing for funding, infrastructural upgrades and policy adjustments that
are beneficial to the ward.

Importance of Ward Committees

Ward Committees are important in various aspects. Some of them are:

 Representation: A Ward committee give residents of a particular ward, a forum to

participate in local decision-making. They ensure that different demographic groups are
represented, supporting diversity and equality in municipal governance.
 Local Knowledge: Ward committee members frequently have a thorough awareness of
the particular problems, opportunities and difficulties within their ward. Making wise
decisions that have a direct impact on the community requires access to this local
knowledge.
 Responsive Governance: Ward committees can serve as a bridge between the
community and the local government in a responsive governance model. They can
categorize and rank the ward’s demands, which makes it simpler for government
representatives to spend funds and put policies in place to meet those needs.
 Local Development: A Ward committee can be extremely important in the design and
execution of local development projects. They might come out in favor of programmes
that advance community development, public services and infrastructure in their ward.

Benefits of Ward Committee

 The involvement of a Ward Committee may improve local citizen’s understanding of

constitutional processes and basic principles of administration.
 Combining knowledge and skills enables a ward community members to take on
leadership roles and participate actively in local governance.
 It might support the creation of unity in society.
 It improves the community member’s organizational and leadership abilities.
 Conflicts and tensions in the neighborhood might be reduced by Ward Committee.
Challenges faced by a Ward Committee

 It lacks in financial resources to meet all of the community’s needs and objectives.
 As all the residents might not be completely aware of the goals and duties of Ward
Committees, which can lead to low participation from their side.
 Misunderstandings can also arise from it.
 The members in the community may lack the training that is necessary.
 If the committee members lack in the technical experience, then the quality of choices
may be highly impacted in the field of urban planning, engineering or public
administration.

73RD AND 74TH CONSTITUTIONAL AMENDMENT ACTS

INTRODUCTION

 With the objective of having a more democratic form of governance, the 73rd and 74th
Amendment Acts were introduced.
 These Amendment acts played a major role in decentralizing power in India by
transferring power from the central and state governments to the local bodies.
 The 73rd and 74th Constitutional Amendment Acts came into force on 24th April 1993
and 1st June 1993, respectively.
 The Constitutional Amendments of 1992 was considered by the experts as an answer to
theimperative need to enshrine in the Constitution certain basic and essential features of
LocalSelf-governments to impart certainty, continuity and strength

HISTORICALBACKGROUND- THE CONSTITUTIONAL AMENDMENTS OF 1992

The village Panchayat was a unit of local administration since the early British days, but theyhad
to work under Government control. When Indian leaders pressed for local autonomy atnational
level the British government sought to meet this demand by offering concession atthe lowest
level, at the initial stage, by giving powers of self-government to Panchayats inrural area and
Municipalities in urban areas, under various local names under different enactments.

In the government of India Act, 1935 the power to enact legislation was specifically given tothe
Provincial Legislature by Entry 15 in the Provincial Legislative List. By virtue of
this power, new Acts were enacted by many other States vesting powers of administration,includ
ing criminal justice, in the hands of the Panchayat.
Notwithstanding such existing legislation, the makers of the Constitution of IndependentIndia
were not much satisfied with the working of these local bodies as institutions of popular
government and therefore, a Directive was included in the Constitution of 1949 in Article40.2

But notwithstanding this Directive in Art. 40, not much attention was given to hold electionsin
these local units as unit of representative democracy in the country as a whole. It wasconsidered
necessary to further the organisation of these local units by inserting specific provisions in the
Constitution itself on the basis of which the Legislatures of the variousstates might enact detailed
laws according to the guidelines provided by the Constitutional provisions.The ideas so evolved,
culminated in the passing of Constitution 73rd and 74th AmendmentActs, 1992 which inserted
Parts IX and IX-A in the Constitution.

Evolution of the Panchayati Raj System - Commitees

73rd Amendment Act, 1992

 This amendment brought the State Governments under the constitutional obligation to
adopt the new system of Panchayati Raj.
 The 11th schedule was added to the Constitution of India, 1950 (COI) through this
amendment which contained 29 subject matters of the Panchayats.
 This act also added Part IX to the COI which contained provisions from Articles 243 to
243 O.
 The act does not apply to Nagaland, Meghalaya, and Mizoram, as well as certain other
areas. These areas include:
 The scheduled areas and tribal areas in the states.
 The hill areas of Manipur with district councils.
 The Darjeeling district of West Bengal with the Darjeeling Gorkha Hill Council.
 However, subject to the exceptions and modifications specified by the Parliament, the
provisions of this Part may be extended to scheduled areas and tribal areas.

CONSTITUTIONAL PROVISIONS OF THE AMENDMENT

1. Panchayati Raj Institutions (PRIs) were made constitutional bodies.

2. Every state had an obligation to establish panchayats in their territories. (Article 243-
B)
3. The State has the responsibility to develop powers, responsibilities, and authorities to
the panchayats. (Article 243-G)
4. The panchayats are elected for a tenure of 5 years.
 5. The amendment provides for a mechanism for the state election commission to
conduct independent elections for the village panchayats.
6. The amendment provides for an adequate representation of women, SCs, and STs in
the village Panchayati Raj Institutions.
7. It is the duty of the State Finance Commission to evaluate the financial position of the
village panchayats.

OBJECTIVES OF THE 73RD CONSTITUTIONAL AMENDMENT ACT, 1992

1. The main objective of the 73rd Constitutional Amendment Act, 1992 was to provide
constitutional status to the panchayats.
2. It aimed at democratic decentralisation of power and resources among the central
government and local bodies such as PRIs. This will create more engagement of the
public in governance.
3. Article 40 of the Indian Constitution states that it is the duty of the government to
establish village panchayats and give them adequate power and authority so that they
can function as a unit of self-government. The government came up with this
amendment to provide an implementation of this Article.
4. The Amendment was based upon the Gandhian principle that advocates for 3-tier
governance where the third level of government can directly deal with the public and
solve their issues and problems at the grass-root level.

ESSENTIAL FEATURES OF THE 73RD

1. Gram Sabha
Gram Sabha is defined under Article 243(b) which states that a gram sabha is a body that
consists of persons registered on the electoral rolls relating to the village that falls under the area
of Panchayat at a village level. It is the foundation of the Panchayati Raj Institution. Article
243A of the Indian Constitution empowers the Gram Sabha to perform the functions at its village
level as is provided by the law or State Legislature.

2. State Election Commission

State Election Commission is constituted in every state for the superintendence, maintenance,
control, and preparation of electoral rolls. The Commission also handles the elections of
panchayats.
3. Three-tier system

Article 243B of the Indian Constitution provides for a three-tier system in the Panchayati Raj
Institution where panchayats shall be constituted at the village, intermediate, and district levels in
every state.

4. Composition of the panchayats

According to Article 243C, the composition of the panchayats shall be as decided by the State
legislature. The number of seats at any level of a panchayat shall be according to the population
of that territory.

5. Manner of election

The election of members of panchayats of village, intermediate, and district levels shall be done
through direct election by the people. The elections of chairman of the intermediate and district
level panchayat will be elected indirectly by the elected members of the panchayats.

6. Reservation of seats

Article 243D provides for the provision of reservation of seats which specifies the reservation of
seats for SCs and STs according to the proportion of their population. The Article also provides
for one-third of the total seats to be reserved for women that belong to the SCs or STs. This
Article empowers the State Legislature to make any provision relating to the reservation of
backward class.

7. Duration of Panchayats

Article 243E specifies the duration of panchayats to be for a term of 5 years if it does not get
dissolved before the completion of its tenure. If the panchayat gets dissolved then the other
panchayat which was constituted would function till the remaining period of the dissolved
panchayat.

8. Duties and power of the panchayats

Article 243G puts State Legislature under an obligation to make laws so as to provide such
power and authorities to the panchayats so that they can function as a unit of self-government. It
is the duty of the panchayats to prepare a plan for economic development and social justice for
the people. The Article provides authority to the state government to give power and authority to
the panchayats on all the 29 subjects prescribed under the Eleventh schedule for local planning
and implementing schemes, i.e., implementing Mahatma Gandhi National Rural Employment
Guarantee, 2006, MGNREGA, which is one of the largest employment generating schemes.
Panchayats implement the schemes made by the central and state governments for the betterment
of people at the ground level. Panchayats have the authority to increase employment facilities
and work upon the development of the area.

9. Finance Commission

Under Article 243I, the Finance Commission is constituted by the Governor of the State to
review the financial position of the Panchayats, to recommend the principles for the distribution
of taxes between the state and panchayats. The finance commission also determines the taxes,
duties, tolls, and fees that will be assigned or appropriated to the panchayats.

10. Audit of accounts

Under Article 243J, the State Legislature is empowered to make provisions for the panchayats to
maintain and audit the accounts of panchayats.

11. Finance

The State Legislature by law may authorise the panchayats to levy and collect tax, duties, tolls,
or fees. The panchayats may be assigned with the tax, duties, fees, or tolls that are collected by
the state government to carry out specific work. The panchayats are provided with a grant-in-aid
from the Consolidated Fund of the State. The state legislature may also constitute a fund for
crediting and withdrawal purposes by or for the panchayats.

IMPACT ON DECENTRALIZATION OF POWER:

 The 73rd and 74th Amendments have had a significant impact on decentralizing power in
India by transferring power from the central and state governments to the local bodies.

 This transfer of power has led to a more democratic form of governance, as it allows
local communities to have a greater say in decisions that affect their daily lives.

 The amendments have also led to a more participatory form of governance, as local
communities are now able to participate in decision-making processes and hold their
elected representatives accountable.

IMPACT ON THE FUNCTIONING OF PANCHAYATS:

 The 73rd Amendment has had a major impact on the functioning of Panchayats in India.
  Prior to the amendment, Panchayats were seen as weak and ineffective institutions,
lacking both the resources and powers needed to effectively serve their communities.

 The amendment has provided Panchayats with a constitutional status, which has allowed
them to secure a more stable source of funding and greater powers to perform their
functions.

 This has enabled Panchayats to become more effective in serving their communities and
delivering basic services such as education, healthcare, and infrastructure.

74TH AMENDMENT ACT, 1992

 The act granted municipalities constitutional status. It has brought them under the
purview of the Constitution's justiciable provisions.
 This act added Part IX-A to the COI which contained provisions from Articles 243P to
243ZG.
 It also added 12th schedule to the COI containing 18 functional items which are to be
placed within the purview of municipalities
 The main aim was to strengthen and revitalise the urban local bodies so that
developments can occur at all the levels of the nation.
 The Amendment Act added a new part to the Constitution, Part IX-A, which consisted of
Articles from 243-P to 243-ZG, ensuring uniformity in the laws made for the
municipalities

SALIENT FEATURES OF 74TH AMENDMENT ACT, 1992

1) Types of Municipalities

Municipalities can be categorised into three distinct categories of Nagar Panchayat, Municipal
Corporation and the Municipal Council.

 The Nagar Panchayat can be found in those areas that are on the verge of transition from
rural to urban areas
 Next is the Municipal Council which is responsible for urban areas that are small in area
 Contrasting to the Municipal Council is the Municipal Corporation which takes care of
the large urban areas

2) Composition of Municipalities
To fill seats in the municipalities, elections are conducted. It is here that the municipal areas are
further categorised into different wards or territorial constituencies. Different people are elected
from these individual constituencies which make up part of a municipal body in that urban area.
It is in the hands of the state legislature to decide the manner of conducting elections for the
urban local bodies

3) Reservation of seats for Scheduled Castes and Scheduled Tribes

As in Part IXreservations of seats are to be made in favour of the Scheduled Castes and
Scheduled Tribesin every municipality.

4)Duration of Municipalities

: every Municipality shall continue for five years from the date ofits first meeting. But it may be
dissolved earlier according to law. Art. 243 Q further prescribes that before dissolution a
reasonable opportunity of being heard must be given tothe municipality. Elections to constitute a
municipality shall be completed before the expiryof period of five years. If the Municipality has
been suspended before the expiry of its term,the elections must be completed within 6 months of
its dissolution. A Municipalityconstituted after its dissolution shall continue only for the
remainder of the term.It has been provided that no amendment of the law in force shall cause
dissolution of a Municipality before the expiry of the five years term.

5) Qualification for membership

: Article 243V lays down that all persons who are qualified to be chosen to the State Legislature
shall be qualified for being a member of a Municipality.There is an important difference. People
who have attained age of 21 years will be eligible to be a member. While the constitutional
requirement is that for election to the State legislaturea person must have attained the age of 25
years.

6) Powers, authorities and responsibilities of Municipalities:

State legislatures have thelegislative power, to confer on the Municipalities all such powers and
authority as may benecessary to enable them to function as institutions of self-government.

 They may be entrusted with the responsibility of

 Preparing plans for economic development and social justice(e)
 Implementation of schemes as may be entrusted to them(f)
  In regard to matters listed in the Twelfth ScheduleThe list contains 18 items urban
Planning, Regulation of land use, Roads and Bridges,water supply, Public health, Fire
services, Urban Forestry, Slums etc.

7)Powers to impose taxes and financial resources

A State may by law authorise aMunicipality to levy, collect, appropriate taxes, duties, tolls etc.
The law may lay down thelimits and procedures to be followed. It can also assign to a
Municipality various taxes, dutiesetc. collected by the State Government. Grants-in-aid may be
given to the Municipalities,from the Consolidated Fund of the State.

8)Panchayat Finance Commissions: every five years, the State Government shall appoint
aFinance Commission to review the financial position of the Panchayats and to
makerecommendations under Art. 243-I. They shall also review the financial position
ofmunicipalities and make recommendations as to-(a)

9) Elections to Municipalities: the State Election Commission under Art. 243K shall have the
power of superintendence, direction and control of

(i) The preparation of electoral rolls for, and

(ii) The conduct of all elections to the Municipalities

10) Bar to interference by courts in electoral matters

: the courts shall have no jurisdiction toexamine the validity of a law, relating to determination of
constituencies or the allotment ofseats made under Art. 243ZA. An election to a Municipality
can be called in question only byan election petition which should be presented to such authority
and in such manner as may be prescribed by or under any law made by the State legislature.

11) Committees for District Planning and Metropolitan Planning

(1)At the district level aDistrict Planning Committee (Art. 243ZD)

(2) In every metropolitan area a Metropolitan Planning Committee (Art. 243 ZB

IMPACT ON THE FUNCTIONING OF MUNICIPALITIES:

 Increased Participation of Citizens: With the functioning of municipalities, the

involvement of citizens in the decision-making process has increased.For example, in
 some municipalities, residents are consulted before making important decisions such as
budget allocation or planning new infrastructure projects.
 Promotion of Environmental Sustainability: The functioning of municipalities has also
helped to promote environmental sustainability.For example, the Ahmedabad Municipal
Corporation has implemented several initiatives to promote green buildings, which helps
to reduce carbon emissions and improve air quality.

CHALLENGE FACED BY PANCHAYATS AND MUNICIPALITIES:

 Lack of Funds, Function and Functionaries: Despite the constitutional provisions, the
Municipalities continue to be dependent on the State Governments for funds and
resources which in turn affects their ability to function effectively.
 Another challenge faced by municipalities is the limited functions and powers. Despite
being responsible for providing essential services, municipalities in India often lack the
necessary powers and resources to carry out their functions effectively.
 Many municipalities in India suffer from a shortage of trained and competent
functionaries.
 This results in a lack of technical expertise in areas such as urban planning and
infrastructure development, which can negatively impact the delivery of services to
citizens.

DIFFERENCE BETWEEN 73RD AND 74TH AMENDMENT ACTS

73rd Amendment Act 74th Amendment Act

It brought the Panchayati Raj System to rural India. It brought the Municipality system to urban India.

It gives provisions for establishing three types of

It laid down a three-tier system that shall comprise to
municipalities in every state- Nagar panchayat,
be the Panchayati Raj.
municipal council, and municipal corporation.

This made the Gram Sabha the fundamental basis of The President of India assented to this act on 20
the Panchayat Raj system to perform the duties and
April 1993.
responsibilities assigned by the State Governments.

The amendment provides for a three-tier Panchayat Raj

It came into force on 1 June 1993.
system at the village, intermediate, and district levels.

It added Part IX to the Indian Constitution. It added Part IX-A to the Indian Constitution.

It contains Articles 243 to 243-O. It contains Articles 243 P – 243 ZG.