Nations debate over issues of climate change and pandemic response amongst others, but it is finally the cities that have the unenviable task of executing the ambitious agendas set up by the national elites. Cities find themselves burdened and crippled to deliver on these promises due to the following factors. First, the lack of adequate authority, federally, to run a city. Second, the funds allocated to cities do not quite match the duties they have to perform. And third, is the lack of capacities to plan, monitor, and execute tasks adequately.
It is time that the first responders to crisis, our cities, are no longer treated as mere urban local bodies that ensure water flows through our taps, garbage is picked up, and roads are tarred, but are actually treated as the custodians of urban governance in India.
In 2022, we must make serious federal and systemic amends to enable and strengthen cities to play out this role, and not only criticise these pale urban structures when they fail to respond to our large requirements. 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. The new pact has also highlighted the need for climate adaptation through planning at the local government level. This is a cue that, globally, the way cities are being perceived is changing. Decentralisation and devolution of power should be the axis around which federal reforms should be implemented and reimagined in cities. While we constantly invoke the 74th Amendment of the Indian Constitution, which brought in the concept of devolution, the three tiers of government which placed urban local bodies at the lowest level, must be redefined 25 years after its conception. We have to assess the reasons why most cities were not able to implement many of these reforms.
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 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% of the divisible pool—approximately Rs 3,464 billion from the divisible pool of taxes—to local governments. After it is distributed, this will constitute almost 25% 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 Rs 380 billion has been laid out for 100% 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.
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.
The article was first published in ORF
The author is a Senior Fellow with the ORF’s political economy programme. The views expressed in this article are those of the author and do not represent the stand of this publication.
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