40 Municipal Governance and Administration in India

Urban Local Government in India

In India, urban local government embodies the democratic governance of cities and towns by the people, exercised through their elected representatives. Its authority is confined to a precisely defined urban area, delineated by the state government to ensure focused administration and service delivery.

India recognizes eight distinct forms of urban local bodies: municipal corporations, municipalities, notified area committees, town area committees, cantonment boards, townships, port trusts, and special purpose agencies. These institutions handle everything from infrastructure development to public health in their respective domains.

This framework gained constitutional status with the 74th Constitutional Amendment Act, 1992, which institutionalized urban self-governance. At the national level, oversight falls primarily under the Ministry of Housing and Urban Affairs, with the Ministry of Defence managing cantonment boards and the Ministry of Home Affairs supervising those in Union Territories.

Historical Evolution of Urban Local Governments in India

The foundations of urban local governance in India were laid during British colonial rule, evolving through a series of key milestones that gradually shifted power toward decentralized administration. This progression began with early municipal experiments and culminated in statutory recognition under major constitutional reforms.

In 1688, the British established India's first municipal corporation in Madras (now Chennai), marking the inception of organized urban self-governance. This was followed in 1726 by similar bodies in Bombay (now Mumbai) and Calcutta (now Kolkata), extending the model to other presidency capitals.

A pivotal push came in 1870 with Lord Mayo’s Resolution on financial decentralization, which envisioned robust local self-government institutions by devolving fiscal powers. This idea gained momentum under Lord Ripon’s Resolution of 1882, widely regarded as the 'Magna Carta' of local self-government in India. Ripon earned the title "Father of Local Self-Government" for his reforms, which expanded elected representation and non-official involvement in municipal bodies.

The early 20th century saw further institutionalization. In 1907, the Royal Commission on Decentralisation—chaired by Hobhouse—submitted its influential 1909 report, advocating stronger local bodies. The Government of India Act, 1919, introduced dyarchy in provinces, placing local self-government under the transferred subjects portfolio, now overseen by an elected Indian minister. In 1924, the Cantonments Act standardized governance in military areas. Finally, the Government of India Act, 1935, advanced provincial autonomy and designated local self-government as a provincial subject, embedding it firmly within elected legislatures.

These developments laid the groundwork for modern urban local bodies, transforming rudimentary colonial setups into precursors of democratic governance.

Committees and Commissions on Urban Governance

Several committees and commissions constituted by the Central Government have played a pivotal role in refining the functioning of urban local bodies. These initiatives, aimed at addressing key challenges in urban governance, are summarized in Table 39.1 below.

65th Constitutional Amendment Bill 1989

In August 1989, the Rajiv Gandhi government introduced the 65th Constitutional Amendment Bill—popularly known as the Nagarpalika Bill—in the Lok Sabha. This landmark proposal aimed to revitalize municipal bodies by elevating them to constitutional status, thereby enhancing their autonomy and institutional strength.

The bill cleared the Lok Sabha but encountered stiff resistance in the Rajya Sabha, where it was defeated in October 1989. Consequently, it lapsed, delaying the constitutional empowerment of urban local governance for several years.

Key Committees and Commissions on Urban Local Governments

Over the decades, numerous committees and commissions have played a pivotal role in analyzing and recommending reforms for India's urban local governance, addressing finances, training, service conditions, and structural powers. Table 39.1 below summarizes these bodies chronologically, highlighting their focus periods and chairpersons where specified.

This compilation underscores the growing emphasis on strengthening urban local bodies through targeted inquiries, laying the groundwork for later constitutional reforms like the 74th Amendment.

The 74th Constitutional Amendment Act, 1992

Enacted in 1992, the 74th Constitutional Amendment Act marked a pivotal step in decentralizing power to urban local bodies by granting them firm constitutional backing. It introduced a new Part IX-A to the Constitution, titled "The Municipalities," encompassing Articles 243-P to 243-ZG. Complementing this, the Act appended the Twelfth Schedule, which lists 18 key functional areas—such as urban planning, water supply, public health, and slum improvement—over which municipalities hold authority, as outlined in Article 243-W.

By elevating municipalities to constitutional status, the Act placed them within the enforceable framework of the Constitution's justiciable provisions. This imposed a clear mandate on state governments: they must implement the municipal system in line with the Act's directives, ensuring structured elections, reservation of seats for marginalized groups, and fixed tenures for these bodies.

Ultimately, the amendment sought to breathe new life into urban local governance, empowering municipalities to operate as robust, effective units of self-government capable of addressing the growing complexities of city life.

Salient Features of the Act

The Act distinguishes itself through a set of core provisions that shape its purpose and implementation. These key elements, distilled for clarity, include:

Municipality Types under 74th Amendment

The 74th Constitutional Amendment Act mandates the establishment of three distinct types of municipalities in every state, tailored to varying degrees of urbanization. These include a nagar panchayat (by whatever name designated) for transitional areas—typically regions shifting from rural to urban character; a municipal council for smaller urban areas; and a municipal corporation for larger urban centers, which demand more comprehensive governance.

An important exception applies in cases where an industrial establishment already provides municipal services to an urban area. Here, the Governor may designate it as an industrial township, exempting it from constituting a formal municipality.

In classifying any area as transitional, smaller urban, or larger urban, the Governor must consider key factors: the area's population and its density; the revenue it generates for local administration; the proportion of employment in non-agricultural pursuits; its economic significance; and any other relevant aspects deemed appropriate. This structured approach ensures municipalities align closely with local realities and needs.

Composition and Membership of Municipalities

The composition of a municipality centers on direct democratic participation. All its members are elected directly by the residents of the municipal area, with the area divided into smaller territorial units called wards for this purpose. This ensures grassroots representation at the local level.

The state legislature holds flexibility in outlining the election process for the municipality's chairperson. Additionally, it may make provisions for the inclusion of certain other individuals in the municipality, enhancing expertise and coordination without necessarily granting them voting rights in meetings. These can include:

• Persons with special knowledge or experience in municipal administration (though they lack voting rights).
• Members of Parliament from the Lok Sabha and members of the state legislative assembly whose constituencies fully or partially overlap with the municipal area.
• Members of the Rajya Sabha or the state legislative council who are registered electors within the municipal area.
• Chairpersons of other committees (excluding ward committees).

This structure, enshrined in the Constitution, balances elected accountability with specialized input, fostering effective urban governance.

Wards Committees

In a key provision to strengthen urban local governance, the Constitution requires the establishment of Wards Committees in any municipality with a population exceeding three lakh. Each such committee encompasses one or more wards within the municipality's territorial jurisdiction, fostering more focused representation and administration at the neighborhood level. State legislatures have the flexibility to enact laws detailing the committees' composition, their specific territorial boundaries, and the process for electing or appointing members to these seats.

Additional Municipal Committees and Chairpersons

Beyond the mandatory wards committees, state legislatures possess the authority to create additional committees through appropriate provisions. The chairpersons of these committees may also be designated as members of the municipality, fostering greater integration between local governance bodies.

Reservation of Seats in Municipalities

The 74th Constitutional Amendment Act mandates the reservation of seats for Scheduled Castes (SCs) and Scheduled Tribes (STs) in every municipality, proportionate to their population relative to the total population of the municipal area. Additionally, at least one-third of the total seats must be reserved for women, encompassing those seats already allocated for women from SC and ST communities. This ensures balanced representation at the grassroots level of local governance.

State legislatures hold flexibility in implementing these provisions. They may specify the manner of reserving chairperson positions for SCs, STs, and women. Moreover, states can extend reservations for seats or chairperson offices to Other Backward Classes (OBCs), tailoring inclusions to local demographic needs.

However, reservations specifically for SCs and STs—both for seats and chairperson positions—remain time-bound. They expire upon the conclusion of the period outlined in Article 334 of the Constitution, which at the time was set at seventy years, extending until 2020. This sunset clause underscores the transitional nature of such affirmative measures.

Municipal Tenure and Dissolution Safeguards

The 74th Constitutional Amendment Act establishes a uniform five-year term for every municipality, ensuring stability and predictability in local governance. However, a municipality may be dissolved prematurely if necessary. In such cases, fresh elections must be held to reconstitute it—either before the original five-year term expires or, following dissolution, within six months from the date of dissolution.

An important exception applies when the remaining term of the dissolved municipality is less than six months; no election is required for such a brief period, avoiding unnecessary administrative costs. Furthermore, any newly constituted municipality after an early dissolution does not receive a fresh five-year tenure. Instead, it serves only for the unexpired portion of the original term, maintaining continuity without extending the overall mandate.

To safeguard against arbitrary action, the Act mandates two key protections: the municipality must be given a reasonable opportunity to be heard before dissolution, upholding principles of natural justice. Additionally, no amendment to existing laws can trigger the dissolution of a municipality before its five-year term ends, preventing legislative maneuvers from undermining elected bodies. These provisions collectively balance administrative flexibility with democratic accountability.

Disqualifications

A person stands disqualified from contesting elections or continuing as a member of a municipality if they are already disqualified under two key categories of state laws. First, this includes any prevailing law governing elections to the state legislature. Second, it encompasses specific laws enacted by the state legislature itself for municipal bodies.

An important exception applies to the age criterion: no individual is disqualified merely for being under 25 years of age, provided they have attained 21 years. This provision ensures broader eligibility while aligning with constitutional standards for local governance.

Finally, any disputes or questions arising from these disqualifications must be resolved by the authority designated by the state legislature, ensuring a structured and impartial adjudication process.

State Election Commission

In India's framework for urban local governance, the State Election Commission holds paramount authority over the preparation of electoral rolls and the conduct of all elections to municipalities. Vested with superintendence, direction, and control, it mirrors the Election Commission's role at the national level but focuses on ensuring free and fair polls for city corporations, municipal councils, and other urban bodies.

Complementing this, state legislatures retain the flexibility to enact laws addressing every facet of municipal elections—from eligibility criteria and polling procedures to dispute resolution—allowing tailored adaptations to local needs while upholding constitutional standards.

Powers and Functions

State legislatures hold the authority to vest municipalities with the essential powers and responsibilities needed for them to thrive as true institutions of self-government. Through a comprehensive devolution scheme, these bodies at the appropriate levels receive mandates in two key areas: first, preparing plans for economic development and social justice; and second, executing schemes entrusted to them for the same purposes, including those linked to the eighteen matters enumerated in the Twelfth Schedule. This framework, introduced by the 74th Constitutional Amendment, empowers urban local bodies to address local needs effectively while aligning with broader developmental goals.

Finances

State legislatures wield considerable authority over municipal finances, ensuring that urban local bodies have the resources needed to function effectively. They may empower municipalities to independently levy, collect, and appropriate taxes, duties, tolls, and fees, granting them direct control over local revenue generation. Legislatures can also assign to municipalities specific taxes, duties, tolls, and fees that the state government itself levies and collects, effectively channeling a portion of state revenues to urban bodies.

To further support municipalities, state legislatures may authorize grants-in-aid from the Consolidated Fund of the State, providing essential financial backing for development and operations. Additionally, they hold the power to establish dedicated funds into which all municipal moneys—revenues from various sources—are credited, promoting transparency and efficient financial management. This structured approach, enshrined in the Constitution, balances autonomy with oversight, enabling municipalities to meet the demands of urban governance.

State Finance Commission and Municipal Finances

Under the constitutional framework, the State Finance Commission—originally constituted to address the needs of panchayats—also plays a vital role in strengthening municipal finances. Every five years, it reviews the financial health of municipalities and submits recommendations to the Governor. These recommendations focus on establishing fair and sustainable fiscal principles, ensuring that urban local bodies receive their due share of resources.

At the core of these recommendations are principles governing the distribution of the net proceeds from taxes, duties, tolls, and fees levied by the state. This includes how these revenues should be shared between the state and municipalities, as well as how they should be allocated among municipalities at various levels. The Commission also advises on which specific taxes, duties, tolls, or fees can be directly assigned to municipalities for their use. Additionally, it outlines the framework for grants-in-aid from the state's Consolidated Fund, providing essential non-tax support to bridge revenue gaps.

Beyond these principles, the State Finance Commission suggests practical measures to bolster the overall financial position of municipalities. It may also address any other issues referred to it by the Governor, particularly those concerning the sound fiscal management of urban local bodies.

Once received, the Governor is required to lay the Commission's recommendations, along with an action-taken report, before the state legislature. This ensures transparency and legislative oversight in implementing fiscal reforms for municipalities.

Complementing this state-level mechanism, the Central Finance Commission steps in to recommend ways to augment the Consolidated Fund of the state. These suggestions aim to supplement municipal resources, drawing directly from the recommendations of the State Finance Commission and fostering a coordinated approach to urban fiscal empowerment.

Audit of Accounts

State legislatures wield significant authority in safeguarding municipal financial transparency. They may enact laws to regulate the maintenance of accounts by municipalities and to ensure the rigorous auditing of such accounts, thereby promoting accountability in urban local governance.

Application to Union Territories

The provisions of this part fully extend to all Union Territories, ensuring a baseline uniformity in governance. However, the President retains discretionary power to tailor their application to any particular Union Territory, by issuing directions that incorporate such exceptions and modifications as deemed necessary. This flexibility allows for customized administration suited to the unique administrative needs of different territories.

Exempted Areas

Certain regions fall outside the scope of the Act, ensuring sensitivity to their unique administrative and cultural contexts. Specifically, it does not extend to scheduled areas and tribal areas within the states. Likewise, the Act leaves untouched the functions and powers of the Darjeeling Gorkha Hill Council in West Bengal.

That said, Parliament retains flexibility to apply the provisions of this part to these exempted scheduled and tribal areas. It may do so through targeted extensions, incorporating any necessary exceptions or modifications to suit local conditions.

District Planning Committees

Under the Indian Constitution, every state must establish a District Planning Committee (DPC) at the district level. This body plays a crucial role in consolidating development plans prepared by panchayats and municipalities within the district, ultimately drafting a unified development plan for the entire district. To ensure smooth functioning, state legislatures are empowered to enact laws addressing key aspects, including the committee's composition, the election process for its members, its specific functions related to district planning, and the method for electing its chairperson.

A defining feature of the DPC's structure is its emphasis on democratic representation. Four-fifths of its members must be elected from among the elected representatives of the district's panchayats and municipalities. This election reflects the district's demographic balance, with seats allocated in proportion to the rural and urban populations. The remaining one-fifth typically includes nominated experts or officials, though states have flexibility in finalizing the details. Once prepared, the draft development plan is forwarded by the committee's chairperson directly to the state government for approval and integration into broader state-level planning.

In crafting this draft plan, the DPC must adopt a collaborative and resource-conscious approach. It is required to give due consideration to matters of shared interest between panchayats and municipalities, such as spatial planning, equitable sharing of water and other physical or natural resources, integrated infrastructure development, and environmental conservation. Additionally, the committee must assess the extent and nature of available resources—financial or otherwise. To enrich this process, it should consult institutions and organizations specified by the Governor, fostering inclusive and well-informed planning that bridges rural and urban divides.

Metropolitan Planning Committees

To foster coordinated urban development, every metropolitan area in India must establish a Metropolitan Planning Committee (MPC). This body is tasked with preparing a draft development plan for the region. The state legislature holds the authority to enact provisions covering key aspects, including the committee's composition, the process for electing its members, representation from the Central government, state government, and other organizations, the committee's functions related to planning and coordination, and the election of its chairperson.

A critical feature of the MPC's structure is that two-thirds of its members must be elected from among the elected representatives of municipalities and the chairpersons of panchayats within the metropolitan area. This election ensures proportional representation, reflecting the population ratio between the municipalities and panchayats in that area. Once finalized, the chairperson of the MPC forwards the draft development plan to the state government for further action.

In crafting this draft plan, the MPC must carefully consider several factors. Primarily, it should align with plans already prepared by the local municipalities and panchayats in the metropolitan area. It must also address matters of shared concern across these bodies, such as coordinated spatial planning, equitable sharing of water and other physical or natural resources, integrated infrastructure development, and environmental conservation. Additionally, the committee needs to incorporate the broader objectives and priorities outlined by both the Government of India and the state government, while accounting for the extent and nature of anticipated investments in the area—from Central and state agencies to other financial or resource contributions. Finally, the MPC is required to consult any institutions or organizations specified by the Governor to ensure comprehensive input.

Continuance of Existing Laws and Municipalities

Under the 74th Constitutional Amendment Act, all state laws governing municipalities remain in force for one year from the Act's commencement on 1 June 1993. This provision gives states a clear deadline: they must transition to the new municipal framework outlined in the Act within this one-year window. At the same time, municipalities already in existence just before the Act took effect continue to operate until their designated terms expire—or until the state legislature decides to dissolve them earlier. This balanced approach ensures stability during the shift to constitutional municipal governance.

Bar to Interference by Courts in Electoral Matters

To safeguard the smooth conduct of local elections, the Constitution strictly limits judicial intervention in municipal electoral processes. Courts are expressly barred from questioning the validity of any law governing the delimitation of constituencies or the allotment of seats to them. Moreover, challenges to any municipal election can only be raised through an election petition, presented to the prescribed authority and strictly in the manner specified by the state legislature. This provision ensures that electoral disputes remain confined to specialized mechanisms, preventing delays from prolonged litigation.

Twelfth Schedule Municipal Functions

The Twelfth Schedule of the Indian Constitution, added through the 74th Constitutional Amendment Act, 1992, empowers urban local bodies—municipalities—with a clear mandate to handle 18 specific functions. This list strengthens decentralized governance by assigning municipalities responsibility for essential aspects of urban life, from planning to public welfare.

At the core are functions related to urban development and infrastructure. Municipalities oversee urban planning including town planning, regulation of land-use and building construction, and broader planning for economic and social development. They also manage critical infrastructure like roads and bridges, water supply for domestic, industrial, and commercial needs, public health, sanitation, conservancy, solid waste management, and fire services.

Environmental and social safeguards form another key pillar. These include urban forestry, protection of the environment, and promotion of ecological aspects; safeguarding the interests of weaker sections, such as the handicapped and mentally retarded; slum improvement and upgradation; and urban poverty alleviation. Municipalities further provide urban amenities like parks, gardens, and playgrounds, while promoting cultural, educational, and aesthetic aspects.

Additional responsibilities cover public facilities and vital services. These encompass burials and burial grounds, cremations, cremation grounds, and electric crematoriums; cattle ponds and prevention of cruelty to animals; vital statistics, including registration of births and deaths; public amenities such as street lighting, parking lots, bus stops, and public conveniences; and regulation of slaughterhouses and tanneries. Together, these functions ensure municipalities play a proactive role in fostering sustainable, inclusive urban growth.

Types of Urban Local Bodies in India

In India, urban local governance is decentralized through a diverse set of institutions designed to manage the growing complexities of city life. Empowered by the 74th Constitutional Amendment Act, 1992, these bodies handle essential services like water supply, sanitation, and urban planning at the grassroots level. Eight principal types of urban local bodies fulfill this role, tailored to the size, status, and specific needs of different urban areas.

At the apex stand Municipal Corporations (also known as Nagar Nigams), which administer large metropolitan cities with populations exceeding a million, wielding significant autonomy and resources. For mid-sized towns, Municipalities (or Nagar Palikas) provide effective governance, balancing administrative efficiency with community needs. Smaller or transitional urban zones are overseen by Notified Area Committees and Town Area Committees, declared by state governments to address nascent urbanization without full municipal structures. Specialized entities like Cantonment Boards manage military enclaves, ensuring disciplined oversight in defense areas, while Townships cater to planned industrial or company-dominated settlements. Coastal hubs fall under Port Trusts, which integrate municipal functions with maritime operations, and Special Purpose Agencies—such as development authorities—tackle targeted urban challenges like housing or infrastructure on a project-specific basis. Together, these bodies form a flexible framework, adapting to India's dynamic urban landscape.

Structure and Functioning of Municipal Corporations

Municipal corporations serve as the primary urban local bodies tasked with administering India's major cities, such as Delhi, Mumbai, Kolkata, Hyderabad, and Bengaluru. These powerful entities are established through legislation: state legislatures create them for cities within their jurisdiction, while Parliament does so for union territories. A state may enact a single comprehensive law governing all its municipal corporations or pass separate acts for each one.

At the heart of every municipal corporation lie three key authorities: the council, the standing committees, and the commissioner. The council functions as the deliberative and legislative arm, comprising councillors directly elected by local residents, along with a small number of nominated experts in municipal administration. Its composition—including reservations for Scheduled Castes, Scheduled Tribes, and women—is regulated by the 74th Constitutional Amendment Act, 1992. Presiding over the council is the mayor, assisted by a deputy mayor. In most states, the mayor is elected for a one-year term that can be renewed, serving primarily as a ceremonial figurehead whose key role is to chair council meetings.

To manage the council's often unwieldy size, standing committees are formed, each specializing in critical areas like public works, education, health, taxation, or finance. These committees exercise decision-making authority within their domains, streamlining the corporation's operations.

Overseeing implementation is the municipal commissioner, the corporation's chief executive. Appointed by the state government—typically from the Indian Administrative Service (IAS)—the commissioner ensures that the council's policies and the standing committees' resolutions translate into action on the ground.

2. Municipality

Municipalities serve as the primary urban local bodies for administering towns and smaller cities across India. Established through acts passed by state legislatures in states or by Parliament in union territories, they operate under names such as municipal council, municipal committee, municipal board, borough municipality, or city municipality.

Like municipal corporations, municipalities function through three key authorities: the council, standing committees, and the chief executive officer. The council forms the deliberative and legislative core, comprising councillors directly elected by local residents. It is led by a president or chairman, supported by a vice-president or vice-chairman, who presides over meetings. Unlike the largely ceremonial mayor of a corporation, the municipal president wields substantial executive authority, making them the central figure in day-to-day governance.

To streamline operations, the council establishes standing committees that specialize in areas like public works, taxation, health, and finance. Overseeing the municipality's routine administration is the chief executive officer—also known as the chief municipal officer—who is appointed by the state government and ensures smooth implementation of council decisions.

3. Notified Area Committee

Notified area committees serve a vital role in urban governance, particularly for areas that fall short of full municipal status yet demand structured administration. These bodies typically oversee two kinds of towns: rapidly expanding ones fueled by industrialization, or smaller settlements that do not yet meet the strict criteria for a municipality but hold strategic importance in the eyes of the state government.

The committee derives its name from the simple yet formal process of its creation—a mere notification published in the government gazette. It operates under the umbrella of the relevant State Municipal Act, but with a key limitation: only those provisions explicitly specified in the establishing notification apply. This flexibility allows the state to tailor its mandate precisely. Moreover, the committee can be vested with powers from other statutes, granting it authority nearly on par with a full-fledged municipality in areas like public health, sanitation, and infrastructure.

What sets it apart most distinctly, however, is its composition. Unlike elected municipalities, a notified area committee is wholly nominated: every member, including the chairperson, is appointed directly by the state government. Consequently, it lacks the democratic element of elections and does not qualify as a statutory body in the conventional sense, positioning it as a transitional administrative tool rather than a permanent local self-government institution.

Town Area Committees

Town area committees function as semi-municipal bodies tailored to the governance of smaller towns, where full-fledged municipal corporations might be unnecessary. These committees shoulder a modest range of civic responsibilities, including drainage systems, road upkeep, street lighting, and sanitation services—essentials that keep daily life running smoothly without overwhelming administrative machinery.

Each committee comes into existence through a dedicated act passed by the state legislature, which meticulously defines its composition, powers, and operational guidelines. Flexibility marks their structure: members may be fully elected by local residents, entirely nominated by the state government, or a blend of the two, allowing states to adapt to local needs and contexts.

Cantonment Board Structure and Governance

Cantonment boards serve as the primary municipal authorities for the civilian population within designated cantonment areas, which are military stations. Established under the Cantonments Act, 2006—a Central government legislation—these boards operate under the administrative oversight of the Ministry of Defence. This sets them apart from other urban local bodies, such as municipalities, which fall under state government jurisdiction; cantonment boards are both created and managed directly by the Centre.

The Cantonments Act, 2006 consolidated and updated earlier laws to enhance democratic participation, strengthen financial resources, and support developmental initiatives in these areas. It repealed the outdated Cantonments Act, 1924. As of 2019, India had 62 such boards, classified into four categories based on the size of the civil population (see Table 39.2).

A cantonment board comprises a mix of elected and nominated members. Elected representatives serve five-year terms, while nominated ex-officio members hold their positions as long as they retain their official roles in the station. The military officer commanding the station acts as the ex-officio president, chairing all meetings. The vice-president, chosen by the elected members from among themselves, also serves a five-year term.

For Category I cantonments—the largest—the board includes: the military officer commanding the station; the cantonment's executive engineer; the health officer; a first-class magistrate nominated by the district magistrate; three military officers nominated by the commanding officer; eight members elected by local residents; and the chief executive officer.

Like municipal corporations, cantonment boards perform a range of obligatory and discretionary functions, covering essential services such as sanitation, water supply, and public health. Their revenue streams include both tax and non-tax sources, ensuring financial sustainability for these operations.

The chief executive officer, appointed by the President of India, belongs to a dedicated central cadre. This officer executes the board's resolutions and committee decisions, providing continuity and expertise in administration.

6. Township

Townships emerge as a distinctive form of urban governance, created by large public enterprises to ensure civic amenities for their staff and workers. These amenities serve the residents of housing colonies built adjacent to industrial plants, fostering self-contained communities. The enterprise appoints a town administrator to manage day-to-day operations, who is supported by engineers alongside technical and non-technical staff. Lacking any elected members, this model operates purely as an extension of the enterprise's bureaucratic structure, prioritizing efficiency over democratic representation.

7. Port Trusts

In India's major port cities—such as Mumbai, Kolkata, and Chennai—Port Trusts function as specialized statutory bodies with a dual mandate. They oversee the efficient management and protection of port infrastructure while also delivering essential civic amenities to surrounding communities. Established through dedicated Acts of Parliament, each Port Trust features a balanced composition of elected and nominated members, led by an official appointed as chairman. Much like a municipal corporation, these trusts handle a range of urban services, blending maritime oversight with local governance to support bustling port ecosystems.

Special Purpose Urban Local Bodies

Beyond the seven multipurpose, area-based urban local bodies—such as municipal corporations and municipalities—states have created specialized agencies to handle specific functions that traditionally fall under municipal jurisdiction. Unlike their multipurpose counterparts, which manage a broad range of services across defined territories, these are function-based entities, often called single-purpose, uni-purpose, or special purpose agencies (also known as functional local bodies). They focus narrowly on tasks like urban planning, infrastructure, or environmental management.

Prominent examples include town improvement trusts, urban development authorities, water supply and sewerage boards, housing boards, pollution control boards, electricity supply boards, and city transport boards. These bodies are typically established either as statutory entities through an act of the state legislature or as departmental units via executive resolution. Operating autonomously, they execute their assigned roles independently of municipal corporations, municipalities, or other urban local governments, without being subordinate to them. This structure allows for targeted expertise and efficiency in addressing urban challenges.

Municipal Personnel Systems in India

In India, urban local governments operate under three distinct municipal personnel systems. Employees serving in these bodies may belong to one system, a combination of them, or even all three, depending on the state's administrative framework.

Separate Personnel System in Local Governance

The Separate Personnel System stands as the most prevalent model in local governance across India. Under this approach, each local body—be it a panchayat, municipality, or similar institution—enjoys full authority to appoint, manage, and discipline its own staff. Crucially, these employees remain non-transferable to other local bodies, preserving a distinct cadre for each entity. By design, this system reinforces the foundational principle of local autonomy and cultivates unwavering loyalty among personnel toward their specific institution.

Unified Personnel System for Municipal Bodies

Unified Personnel System. In this model, the state government exercises full control over the appointment, administration, and discipline of personnel serving in municipal bodies. Essentially, it creates dedicated statewide cadres for all urban local bodies, enabling the smooth transfer of officers and staff across different municipalities within the state. This approach is widely practiced in states such as Andhra Pradesh, Tamil Nadu, Uttar Pradesh, Rajasthan, Madhya Pradesh, and several others.

Integrated Personnel System and Training for Municipal Personnel

In certain states, the Integrated Personnel System seamlessly merges the personnel of state governments with those of local bodies into a single service cadre. Under this arrangement, municipal employees are regarded as part of the state civil services, enabling their transfer not only among local bodies within the state but also between local bodies and state government departments. This eliminates any distinction between local and state civil services, fostering greater administrative flexibility and uniformity. The system is operational in states such as Odisha, Bihar, Karnataka, Punjab, Haryana, and several others.

To equip these personnel with essential skills, several national-level institutions offer specialized training. The All-India Institute of Local Self-Government, established in Mumbai in 1927 as a private registered society, has long been a pioneer in this domain. The Centre for Urban and Environmental Studies, set up in New Delhi in 1967, emerged from the recommendations of the Nur-ud-din Ahmed Committee on Training of Municipal Employees (1963-1965). Complementing it are the Regional Centres for Urban and Environmental Studies, founded in 1968 in Kolkata, Lucknow, Hyderabad, and Mumbai, also on the same committee's advice. Later additions include the National Institute of Urban Affairs, established in 1976, and the Human Settlement Management Institute, launched in 1985. Together, these bodies ensure a robust framework for professional development in urban governance.

Municipal Revenue

Urban local bodies, such as municipalities and corporations, sustain their operations through five key sources of income: tax revenue, non-tax revenue, grants, devolution from state governments, and loans. These streams enable them to fund essential services like infrastructure, sanitation, and public utilities, reflecting a blend of local autonomy and higher-level support.

Tax revenue forms the cornerstone of municipal finances, primarily through levies like property tax—the single most vital source—along with entertainment tax, advertisement tax, professional tax, water tax, taxes on animals and markets, lighting tax, pilgrim tax, and tolls on new bridges. Municipalities also impose various cesses, such as those for libraries, education, and beggary relief. Notably, octroi—a tax on goods entering the local area for consumption, use, or sale—has been abolished in most states, shifting reliance toward other local imposts.

Complementing taxes, non-tax revenue arises from municipal properties and services. This includes rent from owned assets, fees and fines, royalties, profits and dividends, interest income, user charges for public utilities (like water, sanitation, and sewerage), and miscellaneous receipts. These charges ensure that beneficiaries directly contribute to the upkeep of services they use.

Beyond self-generated funds, municipalities receive grants from the Central and state governments. These are earmarked for specific purposes, including development programs, infrastructure projects, and urban reform initiatives, providing crucial financial backing for large-scale improvements.

Devolution represents a structured transfer of funds from state governments to urban local bodies, guided by the recommendations of the State Finance Commission. This mechanism promotes fiscal federalism at the local level, ensuring equitable resource allocation based on assessed needs.

Finally, to cover capital expenditures like major constructions, urban local bodies raise loans from state governments or financial institutions. However, borrowings from external entities require prior state government approval, maintaining oversight on municipal debt. Together, these sources create a balanced revenue framework tailored to the demands of urban governance.

Central Council of Local Government

Established in 1954 under Article 263 of the Indian Constitution through a presidential order, the Central Council of Local Government—originally named the Central Council of Local Self-Government—served as a key advisory platform for local governance. The term "self" was later deemed redundant and dropped in the 1980s, simplifying its title to reflect its focused mandate. Initially addressing both urban and rural local bodies until 1958, the Council has since concentrated exclusively on urban local government matters, aligning with evolving national priorities.

Comprising the Union Minister for Urban Development as its Chairman, along with state ministers responsible for local self-government, the Council fosters collaborative dialogue between the Centre and states. As an advisory body, it provides strategic guidance without executive authority, emphasizing coordination over control.

Among its core functions, the Council considers and recommends policies on urban local governance, proposes legislative measures, and explores avenues for Centre-state cooperation. It also formulates common action programs, advises on Central financial assistance, and reviews the performance of local bodies funded by the Centre, ensuring accountability and effective implementation.