Issues with Urban Local Bodies in India (CAG Report)

1. In November 2024, The Comptroller and Auditor General (CAG) of India released a report about the condition of Urban Local Bodies (ULBs) in 18 states, covering 393 urban local self-governments (ULSGs).
2. These ULBs are responsible for managing cities and towns and serve 241 million people.
3. The audit looked into how well the 74th Constitutional Amendment was being followed and the challenges faced by ULBs, including money issues, staffing, and management.
4. The Comptroller and Auditor General of India has found that 31 years after the 74th Constitutional Amendment to empower urban local bodies came into effect, 18 states are yet to fully implement the law in spirit.

Key Data & Findings:

1. Money Shortfall: ULBs in these states face a 42% gap between the money they earn and the money they need to spend.
2. This means that ULBs don’t have enough money to cover their costs, making it difficult for them to work properly.
3. Spending on Development Work: Only 29% of the total money spent by ULBs goes into actual development work (projects that improve the city).
4. The rest of the money is used for administrative tasks and other non-development activities.
5. Staff Shortages: On average, there is a 37% vacancy rate in ULBs, meaning nearly one-third of the staff positions are unfilled.
6. This affects the efficiency of these bodies and their ability to provide services to the public.

2. Financial Independence of ULBs:

1. Revenue Sources: About 32% of the revenue of ULBs comes from their own sources, like property tax and fees. The rest of the money (about 68%) comes from the central and state governments.
2. This shows that ULBs depend a lot on the higher levels of government for funding.
3. Property Tax Collection: ULBs manage to collect only 56% of the property tax they demand from residents.
4. This suggests that they are not fully successful in collecting taxes, which could help improve their finances. 

3. Devolution of Powers under the 74th Constitutional Amendment:

1. 74th Constitutional Amendment (1993): This amendment was passed to give more power to ULBs by transferring control of certain functions from the state and central governments to the local governments.
2. These functions include urban planning, water supply, land use regulation, public health, and economic development.
3. Devolved Functions: On average, 17 out of 18 functions were given to ULBs.
4. However, some states have not fully transferred all the responsibilities. In 9 states (Chhattisgarh, Haryana, Jharkhand, Madhya Pradesh, Maharashtra, Manipur, Odisha, Punjab, and Tripura), all 18 functions were devolved to ULBs.
5. Urban Planning and Fire Services: These two areas are the least transferred to ULBs, meaning local bodies have little control over these critical areas. 

4. Problems in Governance:

1. Lack of Independence: The CAG found that only 4 of the devolved functions were being carried out with complete independence by ULBs.
2. This means that while ULBs have responsibility for various tasks, they do not always have the power or resources to carry them out effectively.
3. Staffing and Recruitment Issues: In 16 out of 18 states, ULBs have very little or no control over recruiting staff.
4. This means they cannot hire the right people to meet the needs of their city, which creates problems in managing services properly.
5. Weak Implementation of the Amendment: While many states have legally transferred powers to ULBs, the CAG found that the spirit of the 74th Amendment has not been fully followed.
6. ULBs may have the responsibilities, but they often lack the resources, staff, and authority to effectively manage them. 

5. CAG's Recommendations:

1. Better Financial Independence: The CAG recommended that ULBs should be able to raise more of their own money, for example, by improving their property tax collection.
2. This would make ULBs less dependent on government funds.
3. Filling Vacant Jobs: Since there is a 37% vacancy rate, the CAG suggested that ULBs should fill these vacant positions so that they can better serve the public.
4. Granting More Power to Local Bodies: The CAG suggested that ULBs should have more freedom to manage the functions they are responsible for, especially in areas like urban planning, land use, and public health.
5. This would allow them to make decisions that are best for their cities and towns.
6. More Support from State Governments: The CAG urged state governments to create better policies and institutions to help ULBs perform their duties more effectively and make cities better places to live. 

6. Future Implications:

1. Urbanization: By 2050, it is expected that 50% of India’s population will live in cities.
2. With this huge increase in urban population, it is more important than ever to have strong and efficient ULBs to handle the growth and challenges of cities.
3. Collaboration Needed: Srikanth Viswanathan, CEO of Janaagraha, a non-profit that worked with CAG on the report, emphasized that making ULBs stronger should be a national priority. Governments, civil society, and academic institutions should work together to improve urban governance. 

7. States Covered in the Report:

The report covered 18 states, with 393 ULBs in total. These states are: Andhra Pradesh, Assam, Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Karnataka, Kerala, Madhya Pradesh, Maharashtra, Manipur, Odisha, Punjab, Rajasthan, Tamil Nadu, Telangana, Tripura and Uttarakhand.