74th Amendment to the Constitution

The 74th Amendment to the Constitution of India, enacted in 1992 and operational from 24 April 1993, inserted Part IX‑A to create a constitutional framework for urban local bodies (ULBs). By mandating elected municipal councils, a State Finance Commission, and a clear list of functions, the amendment transformed city‑level administration from a largely appointed system into a devolved, democratic institution. Its uniqueness lies in being the sole constitutional provision that obliges every state to recognise and empower municipalities as the third tier of governance, parallel to the Panchayati Raj institutions created by the 73rd Amendment.

Historical Background

The push for municipal reform accelerated after the 1985 National Policy on Urban Development, which highlighted the “urban crisis” of inadequate services for a rapidly expanding city population that had risen from 31 million in 1971 to 377 million by 2011. The 74th Amendment emerged from the 1990‑91 National Commission on Urbanisation, chaired by former Chief Minister K. R. Gopal, whose report recommended constitutional status for ULBs to ensure fiscal autonomy and accountability. Parliament passed the amendment on 20 December 1992, and President Shankar Dayal Sharma gave assent on 22 December 1992, completing the legislative process within a three‑month window.

Core Provisions

Part IX‑A comprises Articles 243P to 243ZG and Schedules VIII and IX, delineating the structure, composition, and powers of municipalities. Articles 243Q and 243R require each state to constitute a Municipal Council for every area with a population exceeding 100 000, a Municipal Corporation for populations over 1 million, and a Nagar Panchayat for smaller towns. Schedule VIII lists 18 functions—ranging from urban planning (function 1) and regulation of land use (function 2) to water supply (function 6) and public health (function 7)—that may be transferred to ULBs. Articles 243ZB and 243ZD mandate that at least one‑third of all seats in municipal bodies be reserved for women, while Articles 243ZC and 243ZE reserve seats for Scheduled Castes, Scheduled Tribes, and minorities in proportion to their local demographics.

Institutional Mechanism

Each municipal body must be headed by a directly elected Mayor (in corporations) or Chairperson (in councils), with a term of five years as stipulated in Article 243U. The State Finance Commission, constituted under Article 243ZG, submits a quinquennial report recommending revenue‑sharing formulas; the 1995 Maharashtra State Finance Commission, for example, allocated 30 percent of the state’s tax proceeds to ULBs. The amendment also created the Ward Committees (Article 243Y) to facilitate citizen participation at the micro‑level, though only Karnataka and West Bengal have operationalized them as of 2023. Municipalities are empowered to levy property tax, water tax, and entertainment tax, providing a fiscal base that, according to the Ministry of Housing and Urban Affairs, generated ₹ 1.2 trillion in 2022‑23.

Implementation and Current Status

By March 2023, India hosted 4 041 urban local bodies, encompassing 2 527 000 elected representatives, the largest municipal electorate in the world. States such as Tamil Nadu and Gujarat have transferred over 80 percent of the Schedule VIII functions, whereas Delhi and Chandigarh remain under partial central control, limiting the amendment’s reach. The Supreme Court’s 2015 judgment in M. C. Mehta v. Union of India affirmed that the devolution of powers under the 74th Amendment is a “constitutional imperative,” prompting several states to accelerate the hand‑over of solid‑waste management and urban transport to municipalities.

Significance for Urban Governance

The 74th Amendment institutionalised local democracy, enabling citizens to influence decisions on housing, sanitation, and infrastructure directly through elected councillors. Empirical studies by the National Institute of Urban Affairs indicate that municipalities with higher fiscal devolution report a 12 percent reduction in average water‑supply interruptions. Moreover, the amendment’s reservation clause has increased women’s representation from 5 percent in 1992 to 33 percent in 2022, reshaping policy priorities toward health and education. As Indian cities continue to absorb an estimated 3 million new urban dwellers annually, the constitutional scaffolding provided by the 74th Amendment remains a pivotal mechanism for sustainable, inclusive urban development.