Why India's cities need stronger municipal governance and funding

Fragmented authority, weak municipal finances and limited devolution continue to hamper service delivery, prompting fresh calls to strengthen city governments across India

A quietly-shelved experiment, adopted during the Covid pandemic by the Centre to directly address municipal governments, could be revived as India finally confronts the problem of fixing urban governance.

 

This has become necessary as multiple studies show that urban areas need investment but cannot procure it in the small tranches that they need. Compounding the problem is the fragmented nature of city administration - some key functions are vested with the state government, while others are with the municipal body.

 

A recent Niti Aayog report, which measured a set of six result areas across cities - water supply, sanitation, solid waste management, urban planning, fire services and bus services - found that states like Maharashtra and Gujarat have the most devolution of functions, with city administrations directly handling most of these services.

 

In contrast, Delhi, Karnataka, Tamil Nadu, Andhra Pradesh, Telangana, Kerala, Uttar Pradesh, and Madhya Pradesh rely more on state-level agencies, particularly for bus services and urban planning. The report suggests these are relatively non-controversial and easy-to-manage services that states could offer the cities. A report by MoHUA on water supply issues in cities notes “a significant portion of urban water supply infrastructure including the distribution network, has exceeded its design life”.

 

Recognising this problem, the Niti Aayog suggested bringing water supply, sanitation and public transport under direct control of the city administrations.

 

“Core responsibilities such as planning, water supply, sewerage, and transportation continue to vest with state departments or parastatals outside the effective control of the municipal bodies," the 'Moving Towards Effective City Governments: A Framework for Million Plus Cities' recommended.

 

The Union finance ministry has also often offered large sums as part of urban investment, but the nodal ministry of housing and urban affairs (MoHUA) has been unable to capitalise on those, largely because of the lack of devolution of responsibilities.

 

At the same time, cities do not forward their financial claims to the central government but to the state governments. State governments, for their part, are reluctant to get tied aid, preferring to get funds as a fungible amount from the Centre that they can allocate at their discretion.

 

Former cabinet secretary Rajiv Gauba, who was the lead author on the report, points out that both the financial and administrative fragmentation weakens municipal authority, “...yet citizens continue to hold local governments accountable for failures in service delivery, even in sectors over which they have no effective control”.

 

Take waster segregation. An 2024 analysis by Mou Sengupta of the Centre for Science and Environment found that although cities have broadly adopted source segregation policies for waste management, only 59 per cent report an effective enforcement and transport of segregated waste for treatment.

 

“Citizen feedback, however, reveals that actual implementation occurs in only 32 per cent of the cities,” the report found.

 

The problem is made worse by the legal structure. The same study found that “...only 43 per cent of the 37 cities studied have some kind of provision in their municipal bye-laws for the integration of the informal sector”.

 

The problem, thus, cuts both ways. At one level, the city administrators do not find money coming in to make the changes necessary to clean up the lanes or provide clean drinking water. And because the money is not there, citizens do not pressure the state legislature to make the necessary changes to hold the city administration more accountable.

 

The Niti Aayog report thus paints a picture of ennui in the city administrations that is almost Dickensian. “Municipal commissioners exercise executive authority but are frequently transferred, leading to disruption of ongoing initiatives. A large proportion of functional positions within urban local bodies are filled through deputation from state departments. While deputation addresses short-term staffing needs, it reduces continuity and constrains the development of dedicated in-house municipal expertise," the report noted.

 

But all is not lost, yet, as the experience with the introduction of electric buses shows. The PM-eBus Sewa Scheme implemented by the MoHUA has proven effective, with nearly 10,000 air-conditioned electric buses deployed in small and medium urban cities with a population of 3 lakh-40 lakh, including clusters of small adjoining statutory towns.

 

The scheme enables about 30 per cent of the participating cities to deploy an organised public transport system and about 80 per cent of the participating cities to transition towards e-mobility for the first time. A government release claims there is an overwhelming response to the Scheme, attributing it to "support for associated infrastructure is also provided, including 100 per cent financial support for Behind-the-Meter power infrastructure for deployment of e-Buses under the Scheme”.

 

A report card for the scheme notes finds that more than 200 infrastructure proposals have been sanctioned (both civil depot and power infrastructure) to meet the demand for charging of 10,000 e-buses.

 

But here, too, it is usually not the municipal bodies which get the buses. Bihar for instance, will get 400 e-buses to operate across the state, but the recipient will be the Bihar State Road Transport Corporation, a state-level undertaking under the Department of Transport.

 

Atul Kumar Verma, administrator of the corporation, said he has full autonomy to structure the bus fleet, currently at 1078 for the state. However, he is not sure if handing over the management of the fleet to the municipal corporations of Patna or Darbhanga would help, he told Business Standard. On a positive note, BSRTC has recently introduced over 100 pink buses as an exclusive service for women passengers across the state, an initiative that has won it an award from SKOCH, a Delhi-based foundation that recognises small-town projects and corporate excellence that drive “inclusive growth across the country”.

 

Data from the directorate of public grievances, a department run by the cabinet secretariat shows complaints from the public across India about urban issues rank at the top with those about the Railways and the Department of Posts. The problem is that urban issues are almost entirely beyond the purview of the centre, yet the volume of complaints shows these are serious portents of citizen disaffection with urban administration.