A holistic restructuring of federal, systemic, and financial governance is required to empower our city governments
With the Glasgow Pact endorsing ‘the urgent need for multilevel and cooperative action’ at the local level, it was for the first time that the role of cities was officially appreciated and recognised in a COP summit.During the pandemic, even within the cities, a strong and successful model that emerged in high density population areas was ward-level management. Formation of ward committees, and the involvement of citizen voices and a local say at the hyper local level was a part of the 74th Amendment, which haven’t found resonance with many city authorities. There is reluctance, even within city governments, in passing over power to the lowest level and empowering citizens and their direct representatives. The Second Administrative Reforms Commission, 2008 recommended that cities adopt a bottom-up approach of functioning on the principle of subsidiarity, which puts wards as the first level of governance that has people closest to it. The tasks are then pushed upwards to higher authorities when the local units are not enabled to perform them. The delegation of work is bottom-up. Such citizen involvement has been tried in Mumbai through its Advanced Locality Management (ALM) groups, and in Delhi through the Bhagidari scheme, where Resident Welfare Groups are set up to work on local civic issues. However, these were never empowered in their participation, through funds or functions. Recently, cities like Vishakapatnam have made requests to the government that the devolution should not be restricted to power but to development, where authorities of the region are able to administer all development work of that region and not be dependent on centrally-allocated funds for an infrastructure push.
The delegation of work is bottom-up. Such citizen involvement has been tried in Mumbai through its Advanced Locality Management (ALM) groups, and in Delhi through the Bhagidari scheme, where Resident Welfare Groups are set up to work on local civic issues.The 15th Finance Commission report tabled in the Budget Session in 2021 was a ray of hope for urban governance. The issue of devolution of taxes to cities after local taxes like Octroi and VAT were subsumed into Goods and Services Taxes (GST) had attracted a lot of clamour and there was demand that a separate City GST must be constituted. But while the consideration of this demand still seems a long time away, the 15th Finance Commission has made an absolute allocation of 4.15 percent of the divisible pool—approximately INR 3,464 billion from the divisible pool of taxes—to local governments. After it is distributed, this will constitute almost 25 percent of the total municipal budgets of most cities. The Commission has also given a fiscal thrust to metropolitan governance by introducing outcome funding to 50 million metropolitan regions with population of over 150 million. Here, an outlay of INR 380 billion has been laid out for 100-percent funding for indicators related to water and sanitation, air quality, and other services. But this is again a double whammy, considering it is still going to flow top-down from the centre to state governments, which then devolve the money to cities. There has always been a question mark on whether the amounts allocated to a city get used completely, since this will depend on the absorption capacities of cities and their ability to spend municipal funds. The Commission has also suggested that other avenues such as city incubation grants should be used to develop smaller towns and regions in the country. This has gained significance in areas with strong political leadership or cities supported by the Smart Cities Mission, which encourages, handholds, and sets up guarantee mechanisms for private investment into the urban sector.
City governments must make their own efforts to ensure that the taxes which are within their ambit—like property tax—are paid by citizens, for which unique mechanisms need to be put in place for ensuring collections are made.Along with devolution of financial or other powers comes transparency and accountability in its systems, the onus for which lies on the city governments. The first step to transparency will be to ensure that city budgets are put in the public domain and follow a simple format that is both easy to understand and comprehensible. City governments must make their own efforts to ensure that the taxes which are within their ambit—like property tax—are paid by citizens, for which unique mechanisms need to be put in place for ensuring collections are made. As issues like climate change gain ground, city governments must introduce tax rebates for green infrastructure to achieve their targets. In conclusion, a three-pronged holistic approach of reimagining federal governance, reworking financial governance, and restructuring systemic governance in urban agglomerations might be the magic pill for creating strong cities. If we want our first responders and drivers of our quality of life to succeed, our political leaders and administrators will need to lend their muscle to put cities first.
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Sayli UdasMankikar was a Senior Fellow with the ORF's political economy programme. She works on issues related to sustainable urbanisation with special focus on urban ...Read More +