State Compliance with the 74th Constitutional Amendment: An Overview

Nearly three decades after the Constitution (Seventy-fourth Amendment) Act, 1992 came into force, urban local governance in India presents a mixed picture. On paper, every state has amended its municipal laws to align with the amendment. In practice, however, the depth of implementation varies widely, and several mandatory provisions remain only partially realised. Understanding this gap between legislative compliance and actual practice is essential to grasping why Indian cities still struggle with fragmented governance, weak financial autonomy, and limited citizen participation.

The constitutional backdrop and the compliance mandate 🔗

The 74th Amendment inserted Part IX-A (Articles 243-P to 243-ZG) and the Twelfth Schedule into the Constitution, giving Urban Local Bodies (ULBs) a justiciable constitutional status for the first time. Until then, municipalities existed purely as creations of state laws and could be dissolved or superseded at will. The amendment came into force on 1 June 1993, and states were given a transition period of one year to bring their municipal laws in conformity with its provisions.

Since local government falls under Entry 5 of the State List, the Union’s role here is catalytic rather than directive. The amendment lays down a scheme, and it is the responsibility of state legislatures to operationalise it through conformity legislation. This federal arrangement is precisely where the compliance question becomes interesting: states have complied formally, but have they complied substantively?

What the amendment expects from states 🔗

Before assessing compliance, it helps to recall what states were expected to do. The core mandates include:

Structural provisions 🔗

States must constitute a three-tier municipal system-Nagar Panchayat for transitional areas, Municipal Council for smaller urban areas, and Municipal Corporation for larger urban areas. They must also hold regular elections every five years, with elections to a dissolved body completed within six months.

Participatory provisions 🔗

Ward Committees are mandatory in all municipalities with a population of three lakh or more. Reservations for Scheduled Castes and Scheduled Tribes must be provided in proportion to population, with at least one-third of total seats reserved for women.

Planning and financial provisions 🔗

Every state must constitute a District Planning Committee (DPC) at the district level to consolidate plans prepared by Panchayats and Municipalities, and a Metropolitan Planning Committee (MPC) for areas with a population of ten lakh or more. A State Finance Commission must be constituted every five years to review the financial position of ULBs, and a State Election Commission must oversee municipal elections.

The broad pattern of state compliance 🔗

A landmark study marking twenty-five years of the Act by Prasad and Pardhasaradhi noted that while all states have amended their municipal laws and are implementing them, the states appear half-hearted about decentralising democracy and reluctant to empower urban local bodies either functionally or financially. This observation captures the essence of the compliance paradox.

If we look state by state, a rough pattern emerges. Kerala, Karnataka, and West Bengal have historically shown stronger compliance, particularly on Ward Committees and devolution of functions. Maharashtra, Tamil Nadu, and Gujarat sit in the middle-robust on elections and reservations, but uneven on planning committees and finance. Several northern and north-eastern states lag behind, often due to special constitutional provisions, exemptions for Scheduled and Tribal Areas, or simply weak political will.

Andhra Pradesh 🔗

Andhra Pradesh amended its municipal laws relatively early and has held regular elections. However, the state has faced repeated controversies over reservation rotation and delays in local body elections, with the matter having reached the Supreme Court in the past. Ward Committees have been notified but their functioning remains largely nominal in most corporations.

Karnataka 🔗

Karnataka amended the Karnataka Municipalities Act, 1964 and the Karnataka Municipal Corporations Act, 1976 to align them with the 74th Amendment. The state is often cited as a relative leader in functional devolution. Yet the Karnataka High Court has intervened on reservation rotation in municipal elections, reflecting continuing interpretive challenges. Ward Committees in Bengaluru, while constituted, have long been criticised for limited citizen representation.

Punjab 🔗

Punjab operates under the Punjab Municipal Act, 1911 (for smaller urban areas) and the Punjab Municipal Corporation Act, 1976 (for larger cities), both amended after 1992 to incorporate the constitutional mandates. Compliance on elections and reservations is reasonably consistent, but the constitution of the District Planning Committee has been uneven, and financial devolution to municipalities continues to be modest.

Uttar Pradesh and Bihar 🔗

Despite amendments to their respective municipal laws, implementation in these large states has remained weak. Ward Committees exist on paper in many cities, and financial devolution has lagged. Bihar, in particular, has faced repeated challenges in holding timely elections and operationalising participatory structures.

Kerala and West Bengal 🔗

Kerala is frequently held up as the gold standard, having integrated Panchayati Raj institutions and ULBs into state-level planning through its People’s Plan Campaign. West Bengal has shown reasonable compliance with Ward Committee provisions, although political interference in local body autonomy has been a recurring concern.

Where compliance remains inadequate 🔗

Even a generous reading of state performance suggests that three areas remain consistently under-implemented.

Ward Committees 🔗

Ward Committees were envisioned as the grassroots tier of urban democracy, bringing citizens into decision-making at the neighbourhood level. In reality, many have been constituted only formally. Where they exist, they often lack genuine powers, adequate citizen representation, or regular meetings. Studies on Bengaluru and other metropolitan cities have repeatedly found that Ward Committees are dominated by elected councillors, with little space for resident participation. The amendment’s vision of participatory urban democracy thus remains largely unfulfilled.

District and Metropolitan Planning Committees 🔗

The constitution of DPCs and MPCs is perhaps the most neglected provision. Mumbai, despite being one of the largest metropolitan regions in the world, established its MPC only in 2008, fifteen years after the amendment came into force. Delhi still does not have a functioning MPC in the spirit envisioned by Article 243-ZE. As a result, metropolitan planning in most Indian cities remains fragmented across parastatal agencies, with little coordination between municipalities and other development authorities.

Financial autonomy and State Finance Commissions 🔗

This is arguably the weakest link. Only a handful of states have constituted their Sixth State Finance Commission on schedule, and reports by the Comptroller and Auditor General have documented cases where devolution was still being carried out based on the recommendations of the Second SFC, even when the Fifth was due. Action Taken Reports, which states are constitutionally required to place before the legislature, are frequently delayed or skipped altogether.

The financial consequences are stark. Urban local bodies generate only around 0.6% of GDP as their own-source revenue, significantly below levels in comparable developing countries. An RBI survey of 221 municipal corporations (2020-21) found that more than 70% experienced a decline in revenues even as expenditure rose sharply. Studies suggest that of the 18 functions listed in the Twelfth Schedule, only about four are fully devolved in practice, with ULBs also facing vacancy rates of 35-37% in sanctioned posts.

Why compliance remains partial 🔗

Several interlocking factors explain why states have been slow to move beyond formal compliance.

Political economy of urban control: Cities are economic powerhouses, and state governments are reluctant to surrender control over urban land, revenue, and patronage networks. Genuine devolution would mean political parties at the state level losing a significant lever of influence.

Parallel parastatal structures: Most metropolitan areas have development authorities, water boards, and housing boards that bypass elected municipalities entirely. This fragmentation effectively dilutes the power of ULBs even when functions are nominally devolved.

Discretionary wording in the Constitution: Articles 243-W and 243-X use the word “may” rather than “shall” when describing the devolution of powers and taxes to municipalities. This gives state legislatures enormous discretion, which they have used to devolve minimally.

Bureaucratic resistance: State bureaucracies have often resisted the transfer of functions and functionaries to ULBs, preferring to retain control through supervisory and recruitment powers.

What needs to change 🔗

The direction of reform is reasonably clear, even if the political will to undertake it is not. Replacing the discretionary “may” with a mandatory “shall” in Articles 243-W and 243-X would make devolution binding rather than optional. States must ensure the timely constitution of Finance Commissions and place Action Taken Reports before the legislature without delay. Detailed activity mapping for the 18 functions in the Twelfth Schedule would reduce ambiguity about which level of government is responsible for what. Ward Committees need to be revived with genuine citizen representation, and Metropolitan Planning Committees must become the real locus of city-region planning rather than a constitutional formality.

The 16th Finance Commission has raised the urban share of local body grants to 45% from 36% under the 15th FC, recommending ₹3.56 lakh crore for ULBs for 2026-31. This is a welcome fiscal correction, but financial devolution without governance reform will have limited impact. The real test of the 74th Amendment lies not in the statute books of states, but in whether Indian cities can finally function as genuine institutions of self-government.

What do you think? Why do you believe states have found it so much easier to comply with the letter of the 74th Amendment than with its spirit? If you had to pick one reform-mandatory devolution, financial autonomy, or participatory Ward Committees-which one would deliver the biggest change in how your city is governed?

References

1. https://mohua.gov.in/upload/uploadfiles/files/74th_CAA13.pdf
2. https://secforuts.mha.gov.in/74th-amendment-and-municipalities-in-india/
3. https://byjus.com/free-ias-prep/municipalities-74-amendment-act-1992/
4. https://www.casemine.com/act/in/5a979daa4a93263ca60b720f
5. https://journals.sagepub.com/doi/abs/10.1177/0019556120923900
6. https://en.wikipedia.org/wiki/Seventy-fourth_Amendment_of_the_Constitution_of_India
7. https://india.mongabay.com/2023/03/state-finance-commissions-in-poor-shape/
8. https://www.drishtiias.com/daily-updates/daily-news-editorials/revitalizing-india-s-local-governance
9. https://laex.in/daily-mains-question/16th-finance-commission-urban-local-bodies/
10. https://vajiramandravi.com/current-affairs/fiscal-devolution-to-cities/