‘Moving Towards Effective City Government: A Framework for Million-Plus Cities’ Report released by NITI Aayog | Current Affairs | Vision IAS

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In Summary

  • India's 47 million-plus cities contribute 60% of GDP but face challenges in infrastructure, service delivery, and governance.
  • Key issues include limited devolution of functions, fragmented institutions, weak revenue bases, and capacity constraints in city governments.
  • Recommendations include directly elected Mayors, integrated service delivery, enhanced municipal finances, institutional restructuring, and legal reforms.

In Summary

India’s 47 million-plus cities account for nearly 1/3rd of India’s urban population and contribute to 60% of India’s GDP.

  • However, these face acute challenges related to infrastructure deficits, service delivery, housing, mobility, environmental sustainability, and social inclusion that impact overall livability and quality of life in these growth centres.

Challenges in Urban Governance in Million-Plus Cities

  • Limited devolution of functions: On average, city governments have full control over only 4 functions out of 18 functions (74th Constitutional Amendment Act).
  • Fragmented institutional setup and ineffective leadership: Absence of clear role demarcation between elected representatives and the municipal administration. 
    • Mayors are not regarded as the real heads.
  • Weak revenue base and limited devolution of funds: Weak own-source revenues, high dependence on tied grants, delays in constitution, inadequate institutional support and weak/ selective implementation of State Finance Commissions’ recommendations.
  • Weak public service delivery: City governments continue to play little or no role in key services like public transport, planning, water and sanitation.
  • Capacity constraints: Shortfalls in recruitment, high dependence on deputation, frequent transfers, and limited investment in training.

Key Recommendations of Report

  • Leadership: Introduce directly elected Mayors with fixed tenure and an empowered Mayor-in-Council.
  • Integrated service delivery: Integrate key services (water, sanitation, transport) under city governments for better coordination.
  • Enhance Municipal Finances: Via own-source revenues, timely fiscal transfers through robust State Finance Commissions, and enabling access to market-based financing mechanisms such as municipal bonds.
  • Institutional Restructuring: Bring parastatal agencies under city oversight with clear roles and coordination.
  • Legal and policy reforms: States to amend Municipal Acts, with the Ministry of Housing and Urban Affairs updating the Model Municipal Law and supporting reforms.
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RELATED TERMS

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Model Municipal Law

A standardized draft legislation prepared by the central government (Ministry of Housing and Urban Affairs) to guide states in updating and reforming their municipal laws, promoting best practices in urban governance.

Municipal bonds

Debt instruments issued by municipal corporations or other local government entities to raise capital for infrastructure projects and public services. They are a key market-based funding source for urban development, as highlighted by the UCF's funding mechanism.

State Finance Commissions

Constitutional bodies established by states under Article 243-I and 243-Y of the Constitution to review the financial position of Panchayats and Municipalities and make recommendations for the distribution of taxes, duties, tolls, and fees between the state and local bodies.

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