Constitutional Status of Municipalities: The 74th Amendment

Before 1992, urban local bodies in India lived a precarious existence. Municipalities were routinely dissolved by state governments, elections were indefinitely postponed, and civic bodies had little say over their own finances. The 74th Constitutional Amendment Act changed this landscape permanently by giving municipalities a secure constitutional footing, much like the one Parliament and State Legislatures have enjoyed since 1950. This single reform reshaped how cities and towns are governed and how close ordinary residents can get to their own local administration.

Why the 74th Amendment was needed 🔗

For decades after Independence, urban governance was an afterthought. The Government of India Act, 1935 had placed local government firmly under state control, and this arrangement continued under the Constitution as Entry 5 of the State List in the Seventh Schedule. The result was uneven. Some states took municipal reform seriously, while others allowed urban bodies to drift.

The problems were structural. Municipal elections were frequently suspended or superseded for indefinite periods, eroding the very idea of grassroots democracy. Financial resources were thin, and state governments steadily encroached on the functions and revenues that once belonged to urban local bodies. A city mayor could be dismissed on a bureaucratic whim. A council could be dissolved and simply not reconstituted.

Three attempts were made to fix this. The Rajiv Gandhi government introduced the 65th Constitutional Amendment Bill in 1989, which passed the Lok Sabha but was defeated in the Rajya Sabha. The V.P. Singh government reintroduced a revised bill in 1990, but it lapsed with the dissolution of the Lok Sabha. Finally, the P.V. Narasimha Rao government pushed through the modified Municipalities Bill, which emerged as the 74th Constitutional Amendment Act of 1992 and came into force on 1 June 1993.

What the amendment actually did 🔗

The 74th Amendment inserted a brand new Part IX-A into the Constitution, titled “The Municipalities”, containing Articles 243P to 243ZG. It also added the Twelfth Schedule, which lists 18 functional items that states can entrust to their urban local bodies. Most importantly, the amendment brought municipalities under the justiciable part of the Constitution, meaning that any violation of their constitutional rights can now be challenged in court.

This legal elevation matters more than it sounds. Before 1993, a state government could treat its municipalities as extensions of its own bureaucracy. After 1993, state governments became constitutionally obligated to set up municipalities as prescribed, hold their elections on time, and respect their defined powers.

A uniform pattern across the country 🔗

Since local government remains a State subject, the Union government cannot directly legislate municipal affairs. What the amendment did instead was outline a scheme that all states must implement by passing conformity legislation. This produced a uniform pattern across the country, except in tribal areas of the north-east, unless Parliament by law extends the provisions to them. The discretion of state governments was sharply curtailed.

The three types of municipalities 🔗

Under Article 243Q, every state must constitute three categories of urban local bodies. The specific category for any given urban area depends on population, population density, revenue generated, percentage of employment in non-agricultural activities, and economic importance. The Governor decides the classification through public notification.

Nagar Panchayat 🔗

A Nagar Panchayat governs an area in transition from rural to urban. These are settlements that have grown beyond what a village panchayat can handle but have not yet become full-fledged towns. Think of a former village near a highway that now has markets, small industries, and migrant workers, but still retains agricultural land at its edges.

Municipal Council 🔗

A Municipal Council (also called Nagar Palika or Nagar Parishad in various states) governs a smaller urban area. Most district towns and tier-3 cities fall in this category. They have more autonomy and a larger functional scope than a Nagar Panchayat.

Municipal Corporation 🔗

A Municipal Corporation (Nagar Nigam or Mahanagar Nigam) governs a larger urban area. Corporations enjoy the widest fiscal autonomy and handle the most complex service delivery. Mumbai, Delhi, Bengaluru, Kolkata, and Chennai are classic examples. The Governor can also designate an area as an industrial township under the proviso to Article 243Q, in which case a municipality need not be constituted at all.

Direct elections and the composition of municipalities 🔗

One of the most democratising features of the amendment is the provision in Article 243R for direct election of all members. The municipal area is divided into territorial constituencies called wards, and residents vote directly for their ward councillors. State legislatures may additionally provide for representation by persons with special knowledge or experience of municipal administration, along with MPs and MLAs whose constituencies fall within the municipal area, and Rajya Sabha and Legislative Council members registered as electors there. These nominated members, however, do not have voting rights in municipal meetings.

Ward committees for larger cities 🔗

For municipalities with a population of three lakh or more, Article 243S requires the constitution of ward committees consisting of one or more wards within the territorial area. The idea is to bring governance closer to neighbourhoods in sprawling cities, allowing localised decision-making on matters like garbage collection, minor roadworks, and street lighting.

Reservation of seats 🔗

The amendment took a deliberate step to make municipal councils reflect the social fabric of their cities. Under Article 243T, seats are reserved for Scheduled Castes and Scheduled Tribes in every municipality in the proportion of their population to the total population in the municipal area.

More consequentially, not less than one-third of the total seats are reserved for women, and this includes seats that are already reserved for SC and ST women. State legislatures may also provide for reservation of the offices of chairpersons for SCs, STs, and women, and can optionally extend reservation to backward classes. This provision has significantly increased women’s participation in urban governance, bringing tens of thousands of women councillors and mayors into active political life.

A fixed five-year term 🔗

Arbitrary dissolution was one of the biggest complaints before 1992, and Article 243U addressed it directly. Every municipality now has a fixed term of five years from the date of its first meeting. Elections must be completed before the term expires. If a municipality is dissolved prematurely, fresh elections must be held within six months from the date of dissolution, unless the remaining term is less than six months. A municipality reconstituted after premature dissolution only serves the remainder of the original term.

The minimum age to contest municipal elections is 21 years. A person disqualified for election to the state legislature is equally disqualified for municipal membership.

Powers, authority, and the Twelfth Schedule 🔗

Under Article 243W, state legislatures may endow municipalities with the powers and responsibilities needed to function as institutions of self-government. The Twelfth Schedule provides an illustrative list of 18 functions that can be devolved, ranging from urban planning to the regulation of slaughterhouses.

The list is comprehensive and covers urban planning including town planning, regulation of land-use and construction, planning for economic and social development, roads and bridges, water supply, public health and sanitation, fire services, urban forestry and environmental protection, safeguarding the interests of weaker sections, slum improvement, urban poverty alleviation, provision of urban amenities such as parks and playgrounds, promotion of cultural and educational aspects, burials and cremations, cattle pounds and prevention of cruelty to animals, vital statistics including registration of births and deaths, public conveniences, and regulation of slaughterhouses and tanneries.

How states have responded varies widely. Bihar, Gujarat, Himachal Pradesh, Haryana, Manipur, Punjab and Rajasthan included all the listed functions in their amended state municipal laws, while others like Andhra Pradesh made no changes. Some states such as Karnataka, Kerala, Madhya Pradesh, Maharashtra, Odisha, Tamil Nadu, Uttar Pradesh and West Bengal went further and added responsibilities beyond the Twelfth Schedule.

Finances and the State Finance Commission 🔗

Constitutional status is hollow without money to back it up. The amendment addressed this through two articles. Article 243X allows state legislatures to authorise municipalities to levy, collect, and appropriate specified taxes, duties, tolls, and fees. It also provides for grants-in-aid from the Consolidated Fund of the State and the constitution of municipal funds for the crediting and withdrawal of money.

The State Finance Commission 🔗

Perhaps the most innovative financial feature is the State Finance Commission. Article 243Y provides that the Finance Commission constituted under Article 243-I shall also review the financial position of the Municipalities and make recommendations to the Governor. A single State Finance Commission typically covers both Panchayats and Municipalities, constituted every five years by the Governor.

The SFC recommends the distribution between the state government and municipalities of the net proceeds of state taxes, duties, tolls, and fees. It also suggests the allocation of shares among municipalities at all levels, the determination of taxes that municipalities can levy or appropriate, grants-in-aid from the Consolidated Fund of the State, and other measures to improve the financial position of urban local bodies. The Governor must cause every SFC recommendation, along with an explanatory memorandum on the action taken, to be laid before the state legislature.

Implementation has been patchy. Many states have not been setting up their State Finance Commissions every five years as mandated, and recommendations often remain on paper. This remains one of the weakest links in the 74th Amendment’s ambition.

Elections, planning, and metropolitan governance 🔗

Under Article 243ZA, the State Election Commission has exclusive authority for the superintendence, direction, and control of the preparation of electoral rolls for, and the conduct of, all municipal elections. Courts are barred from interfering in electoral matters except through an election petition.

The amendment also mandates District Planning Committees under Article 243ZD to consolidate plans prepared by panchayats and municipalities in each district into a unified development plan. For every metropolitan area with a population exceeding ten lakh, a Metropolitan Planning Committee must be constituted under Article 243ZE to prepare a draft development plan for the whole area. These committees attempt to resolve the messy overlap between rural and urban governance at the district and metropolitan level.

Where the provisions do not apply 🔗

Part IX-A does not apply uniformly everywhere. It excludes the scheduled areas and tribal areas of states like Andhra Pradesh, Telangana, Jharkhand, Chhattisgarh, Gujarat, Himachal Pradesh, Madhya Pradesh, Maharashtra, Odisha, and Rajasthan, as well as the tribal areas in Assam, Meghalaya, Tripura, and Mizoram. It also does not affect the functions and powers of the Darjeeling Gorkha Hill Council in West Bengal. Parliament may extend the provisions to these areas by law with modifications.

The impact three decades later 🔗

More than thirty years after its enactment, the 74th Amendment has permanently altered the texture of Indian urban governance. Regular elections have become the norm rather than the exception. Women, SCs, and STs have entered municipal politics at an unprecedented scale. City-level master planning, waste management systems, and citizen grievance platforms have grown more sophisticated because elected councils now have a constitutional right to exist and function.

Challenges remain. Fiscal autonomy is still limited, State Finance Commission recommendations are often ignored, and many state governments continue to keep municipalities dependent through parastatal agencies that handle urban development and water supply. Functional devolution of the Twelfth Schedule subjects remains incomplete in several states. Yet the direction of travel is clear. Cities and towns are no longer administrative afterthoughts. They are constitutional entities with a defined role in India’s federal structure.

What do you think? Should municipalities in larger cities be given powers equivalent to state governments, especially for metropolises whose budgets rival those of small states? And do you believe real urban decentralisation can happen without first strengthening the financial independence promised by the State Finance Commission mechanism?

References

1. https://mohua.gov.in/upload/uploadfiles/files/74th_CAA13.pdf
2. https://byjus.com/free-ias-prep/municipalities-74-amendment-act-1992/
3. https://secforuts.mha.gov.in/74th-amendment-and-municipalities-in-india/
4. https://mahadma.maharashtra.gov.in/en/74th-constitutional-amendment-and-urban-local-bodies-in-india/
5. https://en.wikipedia.org/wiki/Municipal_governance_in_India
6. https://www.constitutionofindia.net/articles/article-243y-finance-commission/
7. https://www.drishtiias.com/daily-news-analysis/need-to-set-up-state-finance-commission
8. https://www.clearias.com/74th-amendment-act/