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The 74th constitutional amendment act mandated the establishment of urban local bodies (ULBs) or city governments as the lowest level of governance in cities and towns, as well as the delegation of powers to them. This landmark project launched by the Government of India in 1993 was founded on the notion that all "power" in a democracy belongs to "the people." The people were granted power through local bodies (referred to as municipalities), notably Municipal Corporations, Councils, and Nagar Panchayats, which would have representatives who are elected on a regular basis and play a crucial role in service planning, provision, and delivery. The above Act also requires institutional changes, such as the formation of Ward Committees, District Planning Committees, and Metropolitan Planning Committees to coordinate cross-jurisdictional planning, as well as the formation of State Election Commissions and State Financial Commissions. This statute effectively grants ULBs a far broader function than that of service providers who provide water, trash management, energy, and so on. On June 1, 1993, it went into effect. The Rajiv Gandhi administration introduced the 65th Constitutional Amendment Bill (Nagarpalika bill) in the Lok Sabha in 1989. The measure sought to enhance and modernise local governments by granting them constitutional status. Despite being passed in the Lok Sabha, the measure was defeated in the Rajya Sabha in October 1989 and therefore lapsed.The National Front Government, led by V P Singh, tabled the modified Nagarpalika Bill in the Lok Sabha in September 1990. The bill, however, was not passed and eventually lapsed due to the dissolution of the Lok Sabha. P V Narasimha Rao's administration introduced the revised Municipalities Bill in the Lok Sabha in September 1991.


The statute has given municipalities constitutional status. As a result, they are now protected under the Constitution's justiciable provisions. In other words, state governments must execute the new municipal system in accordance with the requirements of the act and within the framework of their respective constitutions. The Act intends to reform and revitalise municipal governments so that they can appropriately serve as local government units. The following were the principal provisions introduced by the aforementioned Act: Municipal Government Structure It was passed by Parliament in December 1992 and went into effect on June 1, 1993, amending the Constitution by adding Part IX A (Articles 243-P to 243-ZG) and the 12th schedule.

The 74th amendment established consistent law for all municipalities in the country.

The Act establishes three categories of municipalities in each state, based on their size and area.

  • Nagar Panchayat (for a rural-to-urban transition area).
  • Municipal Council (for a smaller urban area).
  • Municipal Corporation (for a bigger urban area).



  • Direct elections will be held to fill the seats. Each municipal area will be divided into geographical constituencies known as wards for this purpose.
  • The process in which a municipality's chairperson is elected may be prescribed by the state legislature.
  • It may also provide for the representation of the individuals listed below in a municipality. Persons with unique expertise and experience in municipal administration who do not have the right to vote in municipal meetings.
  • Members of the Lok Sabha and state legislative assemblies who represent constituencies that are entirely or partially within the municipal area.
  • Members of the Rajya Sabha and the State Legislative Council registered to vote in the municipal elections. The committee chairpersons (other than ward committees).


  • The Act allows for the reservation of seats in each municipality for scheduled castes and scheduled tribes in proportion to their population in the municipal region.
  • Furthermore, it calls for women to be allocated at least one-third of the total number of seats (including the number of seats reserved for women belonging to the SCs and the STs).
  • The state legislature may make provisions for the manner in which chairperson positions in municipalities are reserved for SCs, STs, and women.
  • It may also make any provision for the reservation of seats in any municipality or the positions of municipal chairpersons in favour of backward classes.
  • The municipality has a fixed term of 5 years beginning with the date of its first meeting.
  • Elections to form a municipality are necessary to be completed before the municipality's term expires.
  • If the municipality is dissolved before the 5-year period is up, the elections to form a new municipality must be held within 6 months of the municipality's dissolution.


  • All municipalities would be given the authority and responsibility necessary to function as effective institutions of self-government.
  • The State Legislature may, by legislation, establish what authorities and obligations are granted to municipalities in terms of developing plans for economic development and social justice, as well as implementing programmes entrusted to them.
  • The Twelfth Schedule of the Constitution includes an example list of functions that may be delegated to municipalities.


The legislation of the state may:

  • authorise a panchayat to levy and collect taxes, duties, duties, and fees.
  • assign to the Panchayat taxes, duties, duties, and fees levied and collected by the state government.
  • provide grants-in-aid to Panchayats from the state's consolidated fund; and provide for the establishment of funds to credit all Panchayat money.
  • The allocation of the net proceeds of the state's taxes, charges, tolls, and fees between the state government and municipalities.

The Finance Commission, established by Article 243-I to examine the financial positions of Panchayati Raj Institutions, would also examine the financial positions of municipalities and offer recommendations to the Governor.The Finance Commission's recommendations will include the following:

  • Allocation of a portion of such revenues to municipalities at all levels throughout the state.
  • Determination of municipal taxes, duties, tolls, and fees to be apportioned or appropriated.
  • Grants from the State Consolidated Fund to municipalities.
  • Measures required to improve the Municipalities' financial position.


The following states' scheduled areas and tribal areas are exempt from the act. At the moment, 10 Indian states have designated regions for conservation: Andhra Pradesh, Telangana, Jharkhand, Chhattisgarh, Gujarat, Himachal Pradesh, Madhya Pradesh, Maharashtra, Orissa, and Rajasthan.There are currently 10 tribal areas (autonomous districts) in four states: Assam, Meghalaya, Tripura, and Mizoram. It shall also have no bearing on the functions and powers of the West Bengal Darjeeling Gorkha Hill Council.


Cities and towns have a tremendous impact on the country's economic growth.These metropolitan areas significantly contribute to the growth of the rural hinterland.To keep this economic shift in line with local needs and realities, people and their representatives must be fully involved in programme formulation and implementation.If democracy is to remain strong and stable in the Houses of Parliament and State Legislatures, its roots must extend into the towns, villages, and cities where people live.

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