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ASSIGNMENT SOLUTIONS GUIDE (2014-2015)

M.P.A.-16
Decentralisation and Local Governance
Disclaimer/Special Note: These are just the sample of the Answers/Solutions to some of the Questions given in the
Assignments. These Sample Answers/Solutions are prepared by Private Teacher/Tutors/Auhtors for the help and Guidance
of the student to get an idea of how he/she can answer the Questions of the Assignments. We do not claim 100% Accuracy
of these sample Answers as these are based on the knowledge and cabability of Private Teacher/Tutor. Sample answers
may be seen as the Guide/Help Book for the reference to prepare the answers of the Question given in the assignment. As
these solutions and answers are prepared by the private teacher/tutor so the chances of error or mistake cannot be denied.
Any Omission or Error is highly regretted though every care has been taken while preparing these Sample Answers/
Solutions. Please consult your own Teacher/Tutor before you prepare a Particular Answer & for uptodate and exact
information, data and solution. Student should must read and refer the official study material provided by the university.
SECTION I
Q. 1. Define Democratic Decentralisation and discuss its evolution in India.
Ans. Concept of Democratic Decentralization: Democracy is about meaningful participation. It is also about
accountability. Strong and vibrant local governments ensure both active participation and purposeful accountability.
It is necessary that in a democracy, tasks, which can be performed locally, should be left in the hands of the local
people and their representatives. Common people are more familiar with their local government than with the government
at the State or national level. They are also more concerned with what local government does or has failed to do as it has
a direct bearing and impact on their day-to-day life. Thus, strengthening local government is like strengthening democratic
processes.
Decentralization is the transfer of power and resources from national governments to sub-national governments or to
the sub-national administrative units of national governments. Decentralization is often regarded as a top-down process
driven by a unitary or federal state in which the central government grants functions, authorities, and resources to subnational levels. But impulses for decentralization can also originate from these lower levels. Decentralization encompasses
a wide range of different political and economic systems, whose properties vary widely. This diversity makes it all the
more important to define terms precisely and use them as consistently as possible.
Political/democratic decentralization is said to occur when powers and resources are transferred to authorities that
are downwardly accountable to local populations. The aim is to increase public participation in local decision-making.
Advocates of this kind of arrangement believe that locally accountable representatives with real public powers and greater
community participation will increase efficiency and equity in the use of public resources. This notion of decentralization
can be contrasted with other kinds of decentralization reforms taking place in the name of democratization and development.
Administrative decentralization is the transfer of responsibility for the planning and management of one or more
public functions from the national government and its centralized agencies to sub-national governments and/or subnational administrative units. Administrative decentralization refers to the institutional architecturestructure, systems,
and proceduresthat supports the implementation and management of those responsibilities under the formal control of
sub-national actors. It encompasses, among others things, sub-national departmental structures and responsibilities; human
resource requirements and management systems; and planning, monitoring and evaluation of service arrangements.
Administrative decentralization may or may not include improving capacities for budgeting, financial management and
financial control, depending on the degree of fiscal decentralization in the country in question. Administrative
decentralization also includes mechanisms for working with higher, peer, and lower levels of government or administration,
as well as mechanisms for working with key local nongovernmental actors, such as traditional authority structures and
private sector partners.
Democratic centralism is a political concept referring to the governance of political parties and groups. The democratic
aspect of this methodology describes the freedom of members of the political party to discuss and debate matters of policy
and direction, but once the decision of the party is made by majority vote, all members are expected to follow that
decision unquestioningly in public. This latter aspect represents the centralism.

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Democratic decentralization, involving the transfer of administrative, fiscal, and political power, is necessary for
decentralization to be successful and for sustainability to be a reality. Democratic decentralization is significantly
strengthened when mechanisms are created at the local level to facilitate the local level planning process, linking government
staff to civil society. Such partnership often necessitates a change in the mind-set of its members as well as resources
devoted to strengthening the capacities and skills necessary for effective facilitation of such processes.
Decentralization is an integral part of the logic of democratizationthe power of a people to determine their own form
of government, representation, policies and services. In designing decentralization strategies it is important to ensure
adequate processes of accountability, transparency and responsiveness by all societal actors.
Democratic Decentralization in India: As the working of Panchayati Raj Institutions since 1959 has been argued as
successful in a few states and a failure in most of the states. It means that the system has been experiencing ups and
downs. Although, the concept of Panchayati Raj is a state subject but, basically each state is free to evolve its own system
depending upon local needs, circumstances administrative conveniences and experiences.With the result, we have a
variety of Panchayati Raj Institutions with all kinds of combinations and permutations. In fact, their success or failure
depends upon their structure, powers, functions leadership, finances and state control. In a big country like India, changes
in different aspects of these bodies have been taking place as per the changing circumstances. Although the whole activities of Panchayati Raj institutions are broad based but their resource base are very weak. As things stand today, the local
economy is very weak which indicates that Panchayati Raj Institutions have very limited scope to impose taxes in their
jurisdiction. Introduction of Panchayati Raj was hailed as one of the most important political innovations in independent
India. It was also considered as a revolutionary step. Panchayati Raj is a system of local self-government where in the
people take upon themselves the responsibility for development. It is also a system of institutional arrangement for
achieving rural development through peoples initiative and participation. Panchayati Raj involves a three-tier structure
of democratic institutions at district, block and village levels namely, Zila Prishad, Panchayat Samiti and Village Panchayats
respectively. These institutions are considered as training ground for democracy and gives political education to the
massess.These institutions were established in 1959 based on the philosophy of decentralization and gram swaraj. Rural
development plans and programmes are implemented at this level so that fruits of development can accrue to the community directly. While distributing powers between the Union and the States, the Constitution of India at Article 40 (Directive Principles of State Policy) vested local bodies and Panchayati Raj as a subject with the states but did not further
elaborate on the relations between the states and this third tier of Government. Panchayati Raj was given another lease of
life in the context of community development projects launched in 1952. The Balwantrai Mehta Committee Report in
1957 underlined the role of elected Panchayat Samitis at the community development block/tehsil level as the basic unit
of democratic decentralization. Only an advisory role was contemplated for the Zila Parishads constituted of panchayat
samiti heads chaired by the Collector. However, the legislation that followed the Committees Report basically continued
the earlier enactments of Provincial Governments to re-iterate the three-tier structure and provide for over-riding powers
of the State Government acting through the Collector. All states have enacted new Acts or incorporated changes in their
existing Acts in conformity with the 73rd and 74th Amendments. In the recent past there has been a conscious effort to
strengthen and revitalize local self-governance in India through the 73rd and 74th Constitutional Amendments. The
landmark legislations aimed at greater clarity between states and local governments in terms of devolution of adequate
powers and resources to enable local bodies to function as vibrant institutions of local government.
Democratic Decentralization in Rural Areas: Panchayati Raj was a strategy for rural development in a context of
centralism that was then seen as a historical necessity. The moral weight of the national movement required that the
aspirations of the peasantry to better conditions of life be fulfilled. The government that came to power initiated land
reforms and institutional change to do away with nefarious traditions of discrimination and domination based on religion
and caste. This required the will of strong central and state governments to be pitted against local vested interests, whether
landlords or Superior castes. Moreover, land revenues had to be reduced and since income levels were low and highly
skewed between individuals and regions, reliance on the spread of indirect rather than the narrow incidence of direct
taxes was necessary which naturally resulted in a centralised system of finance. These constraints, along with others
related to the legacy of the Raj, partition of the country and the enthusiasm for a planned economy, shaped centralism.
However, this centralism was not conducive to the growth in the status of local bodies.
Democratic Decentralization in Urban Areas: In the context of urban India, the 74th Constitutional Amendment
Act (74th CAA) was a milestone as it gave Constitutional validity to Urban Local Bodies (ULBs), codified the procedure
for their constitution and defined their structures, functions and resource generation capabilities. The act aimed at greater
clarity between states and urban local governments in terms of devolution of adequate powers, authorities and resources

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to enable the latter to function as vibrant institutions of local self-governance. The 11th Finance Commission of India
(EFC) took the first constructive steps in measuring decentralization in the Indian context. Decentralization, as envisioned
in the 74th CAA was taken as an important criterion that commanded twenty percent weight in estimating the amount of
EFC grants to the states for the municipal bodies.
The EFC measured decentralization on the basis of the following criteria:
Enactment of state municipal legislations in conformity with the 74th CAA of 1992.
Intervention/restriction in the functioning of the municipalities.
De-jure assignment of functions to municipalities by way of rules, notifications and orders of state governments.
De-jure assignment of taxation powers to municipalities.
Exercise of taxation powers by municipalities.
Constitution of finance commissions by states and submission of action taken reports.
Action taken on the major recommendations of the finance commissions of states.
Election to the municipalities.
Constitution of the District Planning Committees.
The above comprise a well-defined and clearly laid out set of criteria for estimating decentralization. However,
measuring decentralization in line with the above concepts is not an easy task. It is made more difficult by the absence of
designated agencies responsible for collecting and documenting data and information on the above criteria in an objective
and orderly manner.
Democratic Decentralization in Tribal and Schedule Areas: The Constitution 73rd Amendment dealing with
Panchayats recognized the need for special provisions for scheduled areas and tribal areas. It empowers Parliament to
enact legislation providing for exceptions and modification in respect of those areas. The extension, in one or two states,
of the States Law on Panchayats to the tribal areas, without such modifications has created problems. At the same time,
the existence of different traditional systems of self-government in different tribal areas, the provisions of the Fifth and
Sixth Schedules of the Constitution, the lacunae in those sub-rules and the weaknesses in the implementation and the
elaborate provisions of the 73rd amendment, make the exercise a very complex one. Several approaches to address these
issues are possible.
Tribal interests are protected under various special provisions of the Indian Constitution, especially tribal autonomy
and their rights over land, through Fifth and Sixth Schedules. Moreover, there is also a demand for inclusion of tribaldominated regions of Andhra Pradesh under the Sixth Schedule which provides for establishing autonomous district
councils and autonomous regions empowered with legislative, judicial, executive and financial powers, which has not
been considered as yet. Subsequent acts and amendments were also made with an intention to protect the rights and
interest of the tribals in the state but the enforcement of the legislation has been weak. As a result the tribals were
alienated systematically from then resource endowments. The 73rd CAA although conferring constitutional status to
Panchayats did not automatically cover the Scheduled Areas, as local self-governance in tribal areas has to be in consonance
with traditions and customary laws and practices of the tribals. Subsequently, the Government of India appointed a
committee of parliamentarians and experts under the chairmanship of Dileep Singh Bhuria which submitted its report in
January 1995. Based on the recommendations of the committee, the Panchayat Extension to Scheduled Areas (PESA)
Act was enacted in December 1996. The Act is a watered down version of the Bhuria Committee Recommendations,
which was passed in the Parliament without debate. All the states that had scheduled areas within their geographical
boundaries were mandated to amend their existing Panchayati Raj Acts by incorporating the provisions of PESA within
a year of its enactment.
The Bhuria Committee has recommended a three-tier structure of self-governance in the tribal areas:
(1) Gram Sabha: The overarching role of Gram Sabha in deciding affairs of its people and recognizes it as a
competent body to safeguard and preserve traditions and customs, cultural identity, community resources and customary
mode of dispute resolution in the Scheduled Areas.
(2) Gram Panchayat: Elected body of representatives of each Gram Sabha, also to function as an appellate authority
for unresolved disputes at lower level; and
(3) A block: Or Taluk-level body as the next higher level. Additionally, an elected autonomous district council at the
district level with legislative, executive and judicial powers for tribal areas covered under the Sixth Schedule.
Bhuria Committee has also recommended the powers and functions of these three levels in details. The Committee
also proposes in general terms that the Scheduled Areas and Tribal Areas should be vested with adequate powers to deal
with problems like growing indebtedness, land alienation, deforestation, ecological degradation, displacement on account

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of industrialization and modernization, excise policy, alcohol and drug addiction, hydel and water resources etc. However,
it suggests no concrete legislative or executive measures in these areas to empower the proposed institutions.
Q. 2. Dicuss the econmic context of Democratic Decentralisation.
Ans. Economic Context: Rural poverty alleviation through economic and social development was high on the state
agenda in almost all countries of the Asian and Pacific region during the second half of the 20th century. To achieve that
goal, several development models were experimented with. These ranged from state-driven import substitution to marketdriven export promotion models, from agriculture focused to infrastructure focused models and from the trickle-down
approach to directly focused programmes. Several other policies, such as effective land reform, development of irrigation
and drainage systems, subsidized inputs and credit facilities, human resources development and primary education and
health care services were also pursued to achieve economic and social development. As a result, the incidence of poverty
declined during the 1980s and 1990s, but with sharp variations across the region.
In many countries decentralization was the principal institutional development strategy for reaching the local level.
In the enactment of decentralization policies, various strategies and structures of local development were adopted. Yet
development was uneven across subregions, even within a country. In the high growth economies, similarly, opportunities
were created by opening markets at the local level. The traditional cropping and labour demand patterns were replaced by
market-driven high-valued commodities and demand for skilled labourers. This happened in Karnataka, India and central
Thailand, where paddy lands and mangrove areas were converted to high-valued export-earning prawn cultivation.
Economic Aspects (Financial arrangements and funding of PRIs, Rural-Urban local bodies)
Most of the rural development programmes are being carried out as centrally sponsored schemes which shows that
economic decentralization has not taken place in the true sense. Spending of the money by the PRIs is done on the
directions of the higher levels. According to the Ashoka Mehta Committee (1978), part of the inability of Panchayati Raj
institutions to come up to expectation lay in their weak financial resources. However, even the Constitutional Amendments
of 1992 have not pursued any good attempt to guarantee autonomy and freedom from the conventional Godfather.
Financial Devolution is a must for PRIs
A fresh attempt is being made by many governments to transform institutional tools and enable people to be participants
in and beneficiaries of developmental governance. It is increasingly acknowledged that institutionalization of developmental
governance at the local level could increase participation of the people in the mobilization and allocation of resources for
development in their respective areas. It is hoped that by devolving more authority and channelling more resources to the
local bodies, a balanced and equitable distribution of development across the region can be achieved.
The PRIs in India have only 14% of the total funds allocated by the State as united funds, therefore their functionaries
are dissatisfied with insufficient autonomy devolved. Further, the parameters of funding are defined centrally which may
not be suitable to the local conditions. The Zila Parishads are totally dependent on the state and central funding.
Sources of Income of Local Governments in General
The municipal finance relates to tax collection, tax realization and utilization, projects for urban agglomeration, with
advantages of resource mobilization, and utilization of funds, while the panchayat has a plethora of problems. The regional
disparities can be minimized by variation of the grant amount to different localities. All this produced the need for
providing local self-governments a firm constitutional status became necessary which was provided by the 73rd and 74th
Amendments.
Financial Control
The financial control in the Panchayati Raj may be done through several steps. In the first place, the budgets of the
gram panchayats must be approved by their gram sabhas. Moreover, the gram sabha should conduct a social audit of the
expenditure of the gram panchayat and be allowed to ask any information from the gram panchayat. Similarly, the local
governments should not be asked to submit their annual budget for final approval of the state government. Further, the
annual budget of the local governments should be linked with the five-year development plan of the concerned area. The
budgeting and accounting for the local bodies should be in the same format as is specified by the state government or
Comptroller and Auditor General of India for this purpose. The performance budgeting and commercial accounting
should be adopted which will considerably help planning and monitoring of expenditure of local bodies.
Finance: Essence of Panchayati Raj Institutions
The freedom in the financial matters is the essence of Panchayati Raj Institutions. These institutions should select
their own course of development. For this purpose, it is necessary that the sources of finance should not be spending
donations such as grants-in-aid but they should have their sources of finances which should be assured sources. Moreover,
they should be free to spend these finances on such development and maintenance schemes as they like.

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According to Hicks the local bodies must clearly have access to adequate finance
In order to play any sufficient part in economic and social development. Also, Jai Prakash Narayan has emphasized
the need of sufficient resource saying that PRIs cannot run administration properly in the absence of these resources.
Girglani notes that in the 73rd Constitution Amendment Act Panchayati Raj Bodies are institutions of local self-government
in the matters of economic planning and development.
Committees on Panchayat Finances
Many committees and commissions have suggested measures for establishing financial autonomy of the Panchayats
according to which the States have made appropriate provisions in their Panchayati Raj Acts.
Finance Enquiry Committee
The Local Finance Enquiry Committee (1951) studied the problem of financial autonomy and suggested unconditional
assignment of 15% of land revenue in the Panchayat area and the proceeds of the surcharge levied on the transfer of
immovable property to the Panchayat bodies. Panchayats were also to be allowed for levying certain taxes in their territories
to raise their own resources.
Taxation Enquiry Committee
The Taxation Enquiry Committee (1954) suggested reserving certain taxes like tax on profession, duty on transfer of
property, tax on advertisement other than newspapers, tax on property, theatre tax and so on.
Santhanam Committee
This Committee suggested in 1963 that these institutions must have substantial and growing resources, which were
entirely within their power to exploit and to develop if we want to maintain their stability and growth.
Ashok Mehta Committee
The Ashok Mehta Committee (1978) recommended that Panchayats should mobilise sufficient resources of their
own, as no democratic institution can continue upon external resources.
Q. 3. Examine different fields of partnership between Union and State Governments.
Ans. Different Fields of Partnership Revenue Assignment: Revenue assignment is only one factor in the equation
of inter-governmental fiscal relations. It needs to be joined with definition of roles and responsibilities among tiers of
government to implement effective devolution policies.
Principles of Tax Assignment
The conventional model of tax assignment in a multi-tier governmental structure basically assigns all productive
revenue sources to the central government. Since, this prescription accords with the needs and wishes of most central
governments, it is not surprising that this is indeed the pattern found in most countries. When coupled with recent tendencies
to decentralize increasingly important expenditures in many of these countries, however, this centralized assignment of
revenues has put an increasing strain on intergovernmental fiscal transfers and, in some instances, facilitated irresponsible
behaviour by some sub-national governments.
The most immediately important issue is undoubtedly the need to develop a satisfactory revenue base for regional
governments in a number of large countries. As decentralization spreads around the world, however, the growing importance
of sub-national governments in a wide variety of countries suggests that such efforts are unlikely to suffice.
Efficiency of the Internal Common Market
For efficiency in internal common market, taxes on mobile factors and tradable goods should either be assigned to the
national government or coordinated among sub-national governments. The fiscal functions of central and local governments
are traditionally analysed in terms of their respective roles and responsibilities for income redistribution, expenditure
provision, tax assignments and tax transfers. Fiscal decentralization (or fiscal federalism) theory provides the basic criteria
for analyzing local tax systems in terms of efficiency and effectiveness. The implications of decentralizing the public
management system are far-reaching. The manner in which public resources and responsibilities are allocated among
different levels of government will affect a nations overall economic and fiscal performance. The inter-governmental
reform challenge is to design a system of governance that will influence the efficiency with which public resources can be
mobilized and utilized, achieve fiscal equity, and promote macro economic stability.
National Equity
The argument for fiscal decentralization is that due to their proximity to the people, sub-national governments are a
necessary conduit for setting up a system of budgets that best approximate an efficient solution of equating social benefits
and social costs. This leads to service provision by the set of governments closest to the citizens that can adjust budgets
(costs) to local preferences in a manner that best leads to the delivery of a bundle of public services that is responsive to
community preferences. In such a system, sub-national governments provide services to identifiable recipients up to the

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point where the value placed on the last (marginal) amount of services that recipients are willing to pay for is just equal to
the benefit they receive. However, in order to implement this system to garner economic efficiency benefits, local
governments must have the authority to exercise own-source taxation at the margin and be able to make decision on
expenditure items.
Industrial Policy Reforms and Investment
The industrial policy reforms have reduced the industrial licensing requirements, removed restrictions on investment
and expansion, and facilitated easy access to foreign technology and foreign direct investment. The Governments
liberalisation and economic reforms programme aims at rapid and substantial economic growth, and integration with the
global economy in a harmonised manner. All industrial undertakings are exempt from obtaining an industrial licence to
manufacture, except for (i) industries reserved for the Public Sector (Annex I), (ii) industries retained under compulsory
licensing (Annex II), (iii) items of manufacture reserved for the small scale sector and (iv) if the proposal attracts locational
restriction.
The New policy also encompasses encouragement of entrepreneurship, development of indigenous technology through
investment in research and development, brining in new technology, dismantling of the regulatory system, development
of the capital markets and increasing competitiveness for the benefit of the common man. The spread of industrialization
to backward areas of the country will be actively promoted through appropriate incentive, institutions and infrastructure
investments. While recognizing the role of public sector, the new policy seeks to ensure that the public sector is run on
business lines envisaing privatization, disinvestments and public sector restructuring.
Investment Inccentives
Central government investment incentives:
100 per cent profit deduction for developing, maintaining and operating infrastructure facilities.
Tax exemption of 100 per cent on export profits for ten years.
Deduction in respect of certain inter-corporate dividends to the extent of dividend declared.
Various capital subsidy schemes and fiscal incentives for expansion in the northeastern region.
Tax deduction of 100 per cent of profits for 5 years and 50 per cent for next two years for undertakings in Special
Economic Zones (SEZS).
State government investment incentives:
Single window approval system for setting up industrial units.
Electricity duty, registration fee and stamp duty exemptions.
Reservation of plots for NRIs, EOUs and Foreign Investment Projects.
Rebate on land cost, tax concessions and octroi refunds.
Interest rate and fixed capital subsidy.
Fiscal Need
Fiscal effort refers to the relative extent to which a local government actually utilizes the revenue sources available to
itits fiscal or revenue capacity. It is most often used to evaluate or describe the intensity of the attempt of one local
government to raise revenue relative to other comparable local governments. Tax effort comparisons are of questionable
value when used to compare governmental units with different fiscal needs (expenditure responsibilities) or different
taxing authority. Tax capacity is a more common element of state-aid programmes than tax effort. In several states, both
capacity and effort are jointly considered through aid programs that require or expect a minimum level of local tax effort
be applied to local tax bases as a condition for state aid. In several states, state aid is not provided to local governments
that possess high local tax capacity on their own.
Tax effort is a relative measure and cannot be determined without some concept or measure to which to relate it.
Effort is generally measured as the ratio of actual revenues raised per capita to some measure of a jurisdictions per capita
revenue or fiscal capacity. Thus, understanding and interpreting measures of effort require a discussion of the concepts,
methods, and problems associated with measuring capacity. There are two general approaches to measuring tax capacity.
The export adjusted income approach is conceptually more appealing, while the representative tax system approach is
more easily implemented and therefore, more commonly utilized in practice.
Fiscal IncentivesCentre and States
Generally, to generate the fiscal need, the centre is liable. Centre is doing this by giving tax exemption in special
economic zones or tax holidays for some sector or through other measures. Apart from that state government is also
giving some incentive to the different sectors to fulfil the fiscal needs. These incentives includes: subsidies for small
sector or reduced power tariffs or various tax concession.

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Administrative Decentralization
Administrative decentralisation aims at transferring decision-making authority, resources and responsibilities for the
delivery of a select number of public services from the central government to other lower levels of government, agencies,
field offices of central government line agencies. This transfer implies two basic types with different implications on
accountability for resource mobilisation and management and for service delivery.
Federalism is completely different from decentralisation, which is a form of authority which may be arbitrarily
withdrawn. As a matter of fact, the word itself suggests that a power which is by nature held by the centre, moves
elsewhere. This depends on the fact that decentralisation has many dimensions. One has to distribute authority, responsibility
and financial resources for public service provision to agencies, local government institutions, public bodies and this may
happen in structural, political, administrative and economic terms.
The administrative decentralization is delegation: the functions are shifted from the upper to the lower government
levels, which become more autonomous but also accountable towards the Central Government. Usually delegation is
given to a public body or an agency for a service provision for which a tariff is required.
Decentralization throws up exciting possibilities for fundamental reforms. The general atmosphere of change opens
up considerable space for far-reaching administrative reforms. There is much scope for modernization and possibilities
for introduction of totally new systems and procedures. Thus decentralisation facilitates reforms from below, touching
practically every sphere of governance. Even fiscal reforms are possible. This would include rationalization of tax collection
procedures, ushering in of fiscal responsibility provisions, introduce of performance- linked incentive grants, indexation
of certain taxes and non-tax revenues.
SECTION II
Q. 4. Discuss the evolution of Urban Local Government in India.
Ans. The term Local government has two words, Local and Government. The term Local relates to specific
portions of the country defined by Locality, implying a definite area and the population living therein. The Local institutions are concerned with the needs and problems of the area thus, defined. The second word government refers first to
its representative character as it has to form part of the constitutional structure of the country, and in the second place to
the autonomy it possesses. The local authorities are the same flesh and blood as the sovereign, but to a limited extent.
Each council is elected (directly or indirectly) by the people of an area, and it is answerable to that local electorate, just as
the sovereign is ultimately responsible to the national electorate. Thus, local government becomes an integral part of
democracy.
It can, thus, be said that local government is the regulation in particular localities, of matters of primarily of local
importance by locally elected bodies raising the money necessary for their activities, by the imposition of local taxes and
generally subordinate to the Central/State Government. Although, the local authorities are elected bodies, they have to
operate within the framework of the Constitution of the country and the law under which they are created.
The modern municipal government in urban units is essentially a creation and legacy of British rule. It was imported
in India by Britishers from their own land. However, it is said that the origin of local self-government had very deep roots
in ancient India.
On the basis of historical records, excavations and archaeological investigations, it is believed that some form of
local self-government did exist in the remote past. In the Vedas and in the writings of Manu, Kautilya and others, and also
in the records of some travellers like Magasthnese, the origin of local self-government can be traced back to the Buddhist
period.
The Ramayana and the Mahabharata also point to the existence of several forms of local self-government such as
Paura (guild), Nigama, Pauga and Gana, performing various administrative and legislative functions and raising levies
from different sources.
Local government continued during the succeeding period of Hindu rule in the form of town committees, which were
known as Goshthis and Mahajan Samitees. The representative character of these samitees was respected by the rulers.
These Mahajans sometimes delegated their functions to their representatives or to Panchakulas (committees of five) who
used to collect revenue on behalf of the state. In addition to Panchkulas, Talara, an officer of the state, supervised local
administration and policing with the help of the elected representatives.
In the Mauryan period followed by the Gupta era and subsequently in the medieval period, the system of local selfgovernment continued to be more or less the same.
However, the system of local self-government was quite different in the Mughal period. The Mughals were fond of
building new cities and maintaining them. Those cities were, by and large, centres of trade and industry. Surat, Patna and

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Ahmedabad, for example, happened to be provincial capitals and offered a rich market. Whatever urban administration
was there, it was autocratic in form. The City Kotwal, appointed by the Emperor, was the key-centre of municipal
administration. He was responsible for maintenance of inventory of houses, roads, levy and collection of local taxes, tolls,
transit duties etc. The markets were controlled by him. He kept a check on weights and measures and a vigil on the local
prices. These are basically municipal functions, which were performed by him in addition to his foremost duty of maintaining
law and order. Thus, in Kotwal of the Muslim period, offices of the modern Municipal Commissioner and the City
Magistrate were combined.
Pre-Independence Era
First Period (up to 1882): Madras was the first city to have a local government established under a charter, dated
December 30, 1687, issued by the Company.
The Municipal Corporation, which came into existence on September 29, 1688, was to consist of a Mayor, 12
Alderman and 60 to 120 Burgesses.
The next step, not of the same significance was the establishment of Mayors Court in all the presidency towns, i.e.
Madras, Calcutta and Bombay, by King George-I through a Charter issued to the Company on 24th September 1726.
The Charter of 1687 created a corporation and a Mayors court in Madras, while the charter of 1726 created similar
organization in all the three presidency towns. However, under the new charter their functions were largely judicial.With
the renewal of Charter of the East India Company by the British Parliament in 1793, a new attempt was made to establish
municipal organizations in the presidency towns.
In 1801, town duties were imposed in the towns of Bengal for the purpose of improving public resources. Between
1813 and 1816 different regulations were made to set-up committee in large cities to collect taxes on houses and lands for
the provision of a town choukidar. The Act of 1842 was the first formal measure for organizing municipal institutions, but
initially it was confined to Bengal Presidency. Under the Act any town could constitute a committee, if two-thirds of the
householders put up a written demand for the purpose. In U.P. (then called as North West Provinces), the Act was
introduced in two towns at the request of European residents, first in Mussorie in 1842, followed by Nainital in 1845.
However, the said elective principle suffered a set-back in 1856. After the mutiny and its suppression and re-occupation
of Oudh in 1858, the management of Nazul and Municipal affairs was entrusted to Local Agency Committee setup for the
purpose. A Royal Army Sanitation Commission was appointed by the Government in 1863 to report on the condition of
the health of the Army in India. Within a few year of publication of its report and in the wake of Lord Lawrences
resolutions of 1864, Acts were passed for extension of municipal administration in different provinces.
Then in 1870 came the Lord Mayos resolution, which included: But beyond all this, there is a greater and wider
object in view. Local interest, supervision and care are necessary to success in the management of funds devoted to
Education, Sanitation, Medical Charity, and Local Public Works.
Second Phase (1882-1919): The famous resolution, which is also called as Magna Carta of Local Self-government,
was issued by Lord Ripons Government on 18th May, 1882. According to Lord Ripon, Local Self-government was an
instrument of political and popular education. In Madras, a committee was appointed by the government in 1882, to
report on the then existing local self-government and to suggest the needed reforms. In Bombay, the Act of 1884 prescribed
the election of at least one-half of the commissioners as a general rule both in city and town municipalities. Bengal Act
No. III of 1884 also provided for election of two-third municipal commissioners by the rate-payers. The Chairman was to
be elected by the commissioners in a majority of municipalities and the Vice-Chairman in all of them. The number of
official members was also reduced to one-quarter. In North-West Provinces and Oudh a new law was enacted in 1883
(Act XV), which enabled election of three-fourth of the members by the rate-payers and of the Chairman and ViceChairman by the municipal committee. However, the provincial government reserved the right to appoint the chairman in
any municipality.
Punjab, through Act XIII of 1884, gave powers to municipal committees to elect their own presidents and vicepresidents, subject to governments approval. Assam and Central Provinces adopted no new legislation. They continued
to follow the provisions of Bengal Act V of 1872 and Act of 1873 respectively.
A review of the working of various legislations passed by the provincial government after Ripons resolution was
made by the Government of India in 1896. Two resolutions were adopted by Lord Elgins government, one in October,
1896 in respect of municipal bodies and the other for local boards in August, 1897. Lord Curzon, who succeeded Lord
Elgin in 1899 as Viceroy, was a believer in high standards of efficiency. He was not prepared to sacrifice efficiency in
local administration for the sake of self-government. He believed that Indians did not possess the necessary ability to be
entrusted with any considerable measure of self-government. In North-West Provinces and Oudh a new Act was passed in

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1900 to make a comprehensive provision for the organization and administration of municipalities. Viscount Morley, who
was the Secretary of State for India during 1905-10 got worried at this trend of over centralization. At his instance a Royal
Commission on Decentralization was appointed on September12, 1907 to enquire into the relations then-existing for
financial and administrative purposes between the Government of India and the various provincial governments and
between provincial governments and the local bodies. In the wake of Swaraj and Swadeshi movement came MorleyMinto Reforms in 1909. The local bodies were made electoral colleges for certain seats in the provincial legislatures. The
United Provinces Municipalities Act of 1916 (which replaced the Act of 1900) is a landmark in the development of city
governments in U.P. It incorporated recommendations of the Royal Commission on Decentralization and the Resolution of
Government of India, 1915. From the political point of view the importance lies in the removal of guidance and control
exercised by the official chairman.
The joint report on Indian Constitution Reforms (popularly) known as Montague- Chelmsford Report), submitted in
1918, realized the importance of extension of franchise at the local level. The Government of India adopted a resolution
on 16th May 1918 as a corollary to the Montague-Chelmsford Report. At this stage roughly one-third of the chairman of
Municipalities in India were nominated officials, another one-third were elected officials and the remaining one-third
formed elected non-officials.
With the installation of responsible governments under diarchial system in various provinces under the Act of 1919,
the local self- government was transferred to ministers responsible to new provincial legislatures. The ministers and the
legislative councils displayed keen enthusiasm on clothing local bodies with greater powers, freeing them from official
control and making them responsible to a substantially enlarged electorate. This generated enhanced activity in the local
institutions. Municipal elections were keenly contested. And in wake of the recommended reforms came the spate of
municipal legislations in different provinces by repealing or amending the old Acts.
Third Period (1919-1935): To give effects to the principles enunciated in the 1919 Resolution, fresh legislations
were passed in three Presidencies. In Madras, the Municipal Act of 1919 and District Municipalities Act of 1920 gave
powers to the Councils to elect their own chairmen and frame their own budgets. However, the elective strength was
raised to three fourths in 1929. In Bombay city franchise was extended under the Act of 1922. Another Act passed in 1925
made the city municipalities, with a population exceeding one lakh wholly elective. The Indian Statutory Commission
(popularly know as Simon Commission) was appointed by the British Crown in 1927 to examine the working of responsible
government introduced under the Act of 1919 and to suggest steps, which should be taken to advance the system. It
surveyed the developments made in the field of local government from 1920 onwards. The Commission favoured
appointment of professional administrators, to be left free in the details of administration, powers of punishment and
correction, more by advice and encouragement, to the provincial governments, as was the case in Great Britain. New
reforms were introduced under the Government of India Act 1935. A restricted form of provincial autonomy was granted.
The distinction between the reserved and transferred subjects was withdrawn. Popular governments were installed in
different provinces. Indians, having now been given powers, concerned themselves with the re-organization of local selfgovernment.
Fourth Period (1935-1947): In Government of India Act 1935, a restricted form of provincial autonomy was granted.
The distinction between the reserved and transferred subjects was withdrawn. Popular governments were installed in
different provinces. Indians, having now been given powers, concerned themselves with the re-organization of local selfgovernment. Many provincial governments appointed committees to re-organise the local-government. The Government
of United Provinces appointed a committee under the presidentship of Mr. A.G. Kher in 1938 to examine the structure and
working of the existing law and machinery relating to local self-government and to recommend suitable organizational
setups armed with adequate powers and resources. One of the major recommendations of the committee was that those
municipalities which, had a population of 1 lakhs or above and their annual income exceeded Rs. 15 Lakh per annum,
should be declared as Corporations. Their powers and privileges were to be defined by the state government. The popular
governments resigned in 1939 as a protest against the British Governments dragging India into war without her consent.
Therefore, the recommendations made by these committees could not see the light of the day until after independence.
Post-Independence Era
First Phase (1947-1985): Independence brought a new kind of activity in every sphere of public life. It opened a new
chapter in the history of local government in India. The present Constitution came into force in 1950 and the local selfgovernment entered a new phase. The Constitution of India has allotted the local self-government to the state list of
functions. Since Independence much important legislations for reshaping of local self-government have been passed in
many states of India. The constitutions of local bodies were democratized by the introduction of adult suffrage and the

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abolition of communal representation. In July 1953, the U.P. Government took a decision to set up Municipal Corporations
in five big cities of Kanpur, Agra, Varanasi, Allahabad and Lucknow. As a result, the state of U.P. adopted a new Act for
Municipal Corporations in 1959.
After Independence the National Government appointed a committee in 1948 known as the Local Finance Inquiry
Committee, to report on ways and means for improving the financial resources of local bodies. The report came in 1951.
The taxation Enquiry Commission, set up in 1953, was also baffled with this problem. The Central Government though,
under the Constitution not charged with the responsibility of local government, has been the principal source of reforms
in the municipal field. It is the Central Government, which has been responsible for setting up committees and commissions
and other organs devoted to study the problems of local government.
The Centre Council of Local Self-government constituted by the Central Government, has also played a significant
role in labouring on reforms needed in the various aspects of municipal government and administration. The Rural-Urban
Relationship Committee devoted itself to both functional and financial aspects and was largely microscopic in its approach.
One more report came from another committee of the council on the service conditions of municipal employees (196568). Then in 1985, the Central Government appointed the National Commission on Urbanization, which gave its report in
1988. This was the first commission to study and give suggestions on all aspects of urban management.
Second Phase (1985-1992): Apart from the contributions made by the Central Government, committees were appointed
in different states in order to improve the municipal organizations and administration thereunder. Municipal legislations
have been suitably adapted from time to time keeping this end in view. Major structural changes had not taken place
except in the larger and important cities, where municipal corporations had been established, and in U.P. in 1966, where
Centralization of Municipal Services took place, until 1992, when the Constitution 74th Amendment Act was passed.
Third Phase (1992-onwards): The recommendations and suggestions of several commissions and committees appointed
by the Central Government, from time to time, to improve the urban bodies resulted in the enactment of the Constitution
(74th Amendment) Act, 1992. The Constitution (74th Amendment) Act, 1992 is a landmark initiative of the Government of
India to strengthen local self-government in cities and towns. It is built upon the premise that all power in a democracy
rightfully belongs to the, people. It prescribes that the elected municipal representatives must have a decisive role in the
planning, provision and delivery of civic infrastructure and services. Accordingly, the Act stipulates that if the state government
dissolves a Municipality, election to the same must be held within a period of six months. Moreover, the conduct of municipal
elections is entrusted to statutory State Election Commission, rather than being left to executive authorities. The mandate of
the Municipalities is to undertake the tasks of planning for economic development and social justice and implement city/
town development plans. This role is much larger than what is traditionally perceived of them as the providers of services. The
74th Amendment Act aims transformation in the structure of urban service delivery. The starting point for the same is municipal
governance. The Act envisages three types of Municipalities: Municipal Corporations for large cities, Municipal Councils
for smaller cities and towns, and Nagar Panchayats for areas in transition form rural to urban. Accordingly, the state
governments have re-categorized different areas by notifying the criteria for classification of municipal bodies.
To ensure that the Municipalities are sensitive enough to the problems of weaker sections and women, the 74th
Amendment provides for reservations for Scheduled Castes (SCs), Scheduled Tribes (STs) and women in municipal
councils. The seats reserved for SCs and STs are to be in proportion to their share in population of the respective cities/
towns. A minimum of 33 1/3 per cent of per seats are reserved for women. Reservation is intended to provide a voice to
those who were neglected in the past.
Q. 5. Define Sustainable Development and Identify inter-linkages between sustainable development and governance.
Ans. In 1987 the Brundtland Report described sustainability as: Development that meets the needs of the present
without compromising the ability of future generations to meet their own needs.
Deliberately, the Brundtland definition was not very strict. Nevertheless, it introduced important key concepts that
have continued to influence the use of the concept. The Brundtland definition thus addresses inter-generational and
development issues and builds on a recognition of the concept of limitations on the environments ability to met present
and future needs. Following the Brundtland Report, the term sustainable development started entering the vocabulary of
policy-planners and policy-makers. Reflecting this, by the mid-1990s, the definitions of sustainable development began
to involve the simultaneous pursuit of economic, social and environmental objectives.
However, this move was not accompanied by criteria and guidelines on how to handle the three dimensions. Rather,
a win-win-win approach was increasingly advocated in which all three dimensions are comprehensively integrated and
trade-offs are avoided to the extent possible.

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The three-dimensional conceptualization thus offered various actors and institutions the opportunities for a fairly
wide scope of interpretation and use of the sustainability dimensions. As a consequence, various academic disciplines, in
particular environmental economics, sought to set up more binding and measurable definitions of the sustainability concept.
Traditional economic disciplines tend however to focus most on the relation between environment and economics.
Alongwith the development of the definition of sustainable development, procedural aspects gained prominence as well.
In terms of process, sustainable development is perceived less as an ultimate outcome and more as a pathway to change.
Thereby, more emphasis is put on factors that influence decision-making such as organisational culture, availability of
information, the rationality of decision-making, and the use of impact assessment tools. The EU SDS is, in fact, a good
example of a document with much emphasis on the procedural aspects.
Groundwater is an example of renewable resources. These resources are replenished by nature as in the case of crops
and plants. However, even these resources may be overused. For example, in the case of groundwater, if we use more
than what is being replenished by rain then we would be overusing this resource. Non-renewable resources are those
which will get exhausted after years of use. We have a fixed stock on earth which cannot be replenished. We do discover
new resources that we did not know of earlier. New sources in this way add to the stock. However, over time, even this
will get exhausted.
Inter-linkage between Sustainable Development and Governance: Social integration entails the implementation
of programmes aimed at improving equity of access to public services for the most vulnerable, namely women, children,
the elderly, the disabled and the poor. Good governance requires the strengthening legal and institutional frameworks,
information dissemination, public participation, and improving accountability and transparency. There is thus, a need to
develop regional strategies and programmes to support social integration and strengthen governance for sustainable
development.
Governance for human development relates to the management of all such processes that, in any society, define the
environment which permits and enables individuals to raise their capability levels, on one hand, and provide opportunities
to realize their potential and enlarge the set of available choices, on the other. These processes, covering the political,
social and economic aspects of life impact every level of human enterprise, be it the individual, the household, the village,
the region or even the nation as a whole. It covers the state, the civil society and the market, each of which is critical for
sustaining human development. The state is responsible for creating a conducive political, legal and economic environment
for building individual capabilities and encouraging private initiative. The market is expected to create opportunities for
people. The civil society facilitates the mobilization of public opinion and peoples participation in economic, social and
political activities for sustaining an efficient and productive social order. In order that these processes lead towards the
desired social ends, governance requires the exercise of legitimate political power, by the designated bodies, in a manner
that is perceived as equitable, non-discriminatory, socially sensitive, participatory, and above all accountable to the people
at large. While these are generic, universally relevant and accepted features of good governance, there are always aspects
of governance that are contextually driven, geared to address the local concerns and reflect the aspirations of the people.
In some sense then, the process of governance is, perhaps, unique to every society.

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