Strengthening Local Governance: The 74th Constitutional Amendment and Urban Development

India’s cities have grown faster than their governments could keep up with. For decades, municipal bodies ran on borrowed authority, with state governments free to postpone elections, dissolve councils, or simply let them fade into irrelevance. The Constitution (Seventy-Fourth) Amendment Act, 1992 changed that equation permanently. It gave towns and cities a constitutional guarantee of self-governance, something rural India had already received a year earlier through the 73rd Amendment. Understanding what this amendment actually did, and where it has fallen short, tells you a lot about how urban India is governed today.

Why urban local bodies needed a constitutional fix 🔗

Before 1993, municipal governance in Indian cities was a fragile, almost improvised affair. Local bodies functioned under ordinary state laws rather than the Constitution itself, which meant a state government could supersede or dissolve them and leave the city without an elected local authority for years. Specialised state agencies quietly took over functions and finances that municipalities were meant to handle, hollowing out these bodies from the inside. The Ministry of Home Affairs notes that this instability directly undermined the constitutional obligation states have under the Directive Principles to organise units of local self-government.

A patchwork system with no guarantees 🔗

Different states ran their municipalities differently, with no uniform structure, no fixed tenure, and no independent body to conduct elections. A city council could be dissolved mid-term for political convenience, and there was no constitutional remedy to challenge that decision. Financial dependence compounded the problem: municipalities had little revenue-raising power of their own and relied almost entirely on discretionary transfers from the state.

The push for reform 🔗

The first serious attempt to fix this came from Rajiv Gandhi’s government through the 65th Constitutional Amendment Bill in 1989, but it lapsed when the Lok Sabha was dissolved before passage. The P.V. Narasimha Rao government revived the effort with a modified Municipalities Bill introduced in September 1991. Parliament passed it in December 1992, and it came into force on 1 June 1993, inserting a new Part IX-A, titled “The Municipalities,” into the Constitution.

What the 74th amendment actually changed 🔗

The amendment did two structurally important things. First, it added Part IX-A, spanning Articles 243P to 243ZG, giving municipalities a justiciable place in the Constitution for the first time. Second, it added the Twelfth Schedule, listing eighteen functions that states could entrust to municipalities, from urban planning and water supply to slum improvement and solid waste management.

A uniform three-tier structure 🔗

Every state now had to categorise its urban areas into three types of municipal bodies based on population and stage of urbanisation. A Nagar Panchayat covers a transitional area moving from rural to urban, a Municipal Council governs a smaller urban area, and a Municipal Corporation governs a larger city. This gave India, for the first time, a consistent framework for classifying and governing its towns and cities, whatever their state.

Elections that cannot be indefinitely postponed 🔗

Every member of a municipality must now be chosen directly by residents through territorial constituencies called wards. Each municipal body has a fixed five-year term, and if it is dissolved earlier, fresh elections must be held within six months. To keep this process free of political interference, every state has to set up an independent State Election Commission solely responsible for conducting and supervising municipal elections, mirroring the role the Election Commission of India plays at the national level.

Reservation for those historically left out 🔗

Seats are reserved for Scheduled Castes and Scheduled Tribes in proportion to their share of the local population. On top of this, not less than one-third of all seats, including a third of the SC and ST seats, must be reserved for women, and chairperson positions are reserved for women in a similar proportion. As PRS Legislative Research documents, this binding requirement, introduced when women’s presence in elected bodies was negligible, was one of the earliest and most significant instruments of gender inclusion in Indian democracy. States also have the discretion to extend similar reservation to backward classes if they choose.

Money and the question of financial autonomy 🔗

Constitutional status means little without money to back it. Article 243Y requires every state to set up a State Finance Commission every five years to review municipal finances and recommend how taxes, duties, and grants should be shared between the state and its local bodies. States are also required to pass on grants-in-aid for basic services such as water supply, sanitation, and roads, and to devolve funds to municipalities on a regular basis rather than leaving this to discretion. Under Article 243W, state legislatures can go further and pass laws giving municipalities the powers and responsibilities they need to actually function as institutions of self-government, including subjects listed in the Twelfth Schedule.

Planning that crosses municipal boundaries 🔗

Cities do not grow in isolation. For urban areas with a population of three lakh or more, the amendment mandates Ward Committees so that decision-making happens closer to residents within large cities. At the district level, a District Planning Committee consolidates the development plans of panchayats and municipalities into a single district plan, bridging the rural-urban divide created by the 73rd and 74th Amendments. For the country’s largest urban agglomerations, defined as areas with a population above ten lakh, a Metropolitan Planning Committee is required to prepare a coordinated development plan that accounts for shared resources like water, infrastructure, and environmental concerns across multiple municipalities and panchayats.

How this reshaped urban development on the ground 🔗

Nearly three decades on, the picture is mixed. On paper, the 74th Amendment succeeded in doing what it set out to do: it institutionalised regular municipal elections, embedded reservation for women and marginalised groups, and gave every state a common template for organising its cities.

Where it clearly delivered 🔗

Local democracy at the municipal level is far more stable today than it was before 1993. Elections happen on a fixed schedule, women hold a genuine and growing share of elected offices, and cities have a constitutional forum, the ward committee, through which residents can engage directly with local decision-making. National missions built around urban local bodies, such as sanitation and waste management drives coordinated through the Ministry of Housing and Urban Affairs, rely on this institutional backbone of thousands of ULBs across the country to reach households and wards directly.

Where implementation still falls short 🔗

Financial autonomy remains the amendment’s weakest link. Many municipalities continue to depend heavily on state and central transfers because their own revenue base, largely property tax and user charges, is too narrow to fund the services they are expected to deliver. A review by the National Institute of Urban Affairs points out that State Finance Commissions have often been constituted late or their recommendations only partially accepted, which weakens the fiscal transfer mechanism the amendment was designed to strengthen. District Planning Committees and Metropolitan Planning Committees, too, exist mostly on paper in several states, leaving city planning fragmented across multiple parastatal agencies rather than consolidated under elected municipal bodies. Academic research published in ScienceDirect on India’s metropolitan governance experience notes that this overlap between municipal governments, parastatals, and state agencies makes it genuinely difficult to build a clean hierarchy of planning and service delivery in large urban regions.

Why the gap matters for India’s growth story 🔗

India is urbanising fast, and much of that growth is happening in exactly the kind of mid-sized towns the amendment was meant to empower. When a municipality has the mandate to plan for its own water supply, sanitation, and land use but not the financial muscle or functional clarity to act on it, the gap between constitutional intent and everyday reality widens. Genuine devolution, of funds, functions, and functionaries together, rather than any one in isolation, is what most policy assessments point to as the missing piece nearly thirty years later.

What do you think? 🔗

What do you think? Do you think one-third reservation for women in urban local bodies has changed how Indian cities are actually governed, or mostly changed who holds office? And if you look at your own city’s municipal corporation, does it feel like a genuinely empowered local government, or one still waiting on the state for money and functions it was constitutionally promised?

References

1. https://secforuts.mha.gov.in/74th-amendment-and-municipalities-in-india/
2. https://prsindia.org/billtrack/the-constitution-one-hundred-twenty-eighth-amendment-bill-2023
3. https://www.pib.gov.in/PressReleasePage.aspx?PRID=1889773
4. https://niua.in/sites/default/files/2025-07/2024_2_%20Impact%20of%20the%2074th.pdf
5. https://www.sciencedirect.com/science/article/pii/S2226585618301365