Local government: the 73rd and 74th Amendments

The Constitution (Seventy-third Amendment) Act and the Constitution (Seventy-fourth Amendment) Act, both of 1992, added two new parts to the Constitution and, with them, a third tier of elected government below the Union and the states. Part IX governs panchayats in rural areas and Part IXA governs municipalities in urban ones. What the amendments guarantee is existence: these bodies must be constituted, they must be elected, they must be reconstituted on time, and certain seats in them must be reserved. What the amendments do not guarantee is power. The provisions that would give a village council or a city corporation something to administer are written in the permissive voice, and thirty years of Indian local government have turned on that grammatical choice.

What became compulsory in 1993

The seventy-third amendment came into force on 24 April 1993 and the seventy-fourth on 1 June 1993. Between them they made the following mandatory in every state to which they apply.

• Three rural tiers. Panchayats at the village, intermediate and district levels, except that a state with a population not exceeding twenty lakhs may omit the intermediate tier.
• Three kinds of urban body, graded by what the area is rather than by its size alone: a nagar panchayat for an area in transition from rural to urban, a municipal council for a smaller urban area, and a municipal corporation for a larger one.
• Direct election. Seats are filled by direct election from territorial constituencies within the local area.
• A fixed five-year term, with the election to constitute the next body completed before the current one expires. A body dissolved early must be replaced within six months, and the replacement serves only the remainder of the unexpired term — a provision written specifically to remove the incentive to dissolve an inconvenient council.
• Reservation. Seats are reserved for the Scheduled Castes and the Scheduled Tribes in proportion to their population in the area, and not less than one-third of all seats — including one-third of those reserved for Scheduled Caste and Scheduled Tribe candidates — are reserved for women. Chairperson offices are reserved on the same principle. A number of states have since raised the women’s floor to one half by their own legislation, which the Constitution permits because one-third is a minimum and not a cap.
• A State Election Commission in every state, headed by a State Election Commissioner appointed by the Governor, holding the superintendence, direction and control of local electoral rolls and local elections. This is a separate institution from the national Election Commission of India, which has no role in panchayat or municipal elections.
• A State Finance Commission, constituted by the Governor every fifth year to review the financial position of the local bodies and recommend how state taxes should be shared with them.
• Planning committees. A district planning committee in every district to consolidate rural and urban plans, and a metropolitan planning committee in every metropolitan area.

What was left permissive

The two articles that matter most for what a local body actually does are written the same way. The legislature of a state may, by law, endow panchayats, and separately municipalities, with such powers and authority as may be necessary to enable them to function as institutions of self-government, including responsibility for preparing plans and implementing schemes in relation to the subjects listed in the Eleventh Schedule for panchayats and the Twelfth Schedule for municipalities. The taxation article is built the same way: a state legislature may authorise a local body to levy, collect and appropriate taxes, duties, tolls and fees.

So the schedules are not a devolution list. They are a menu of twenty-nine rural and eighteen urban subjects from which a state may transfer as much or as little as it chooses, and states have chosen very differently. The shorthand used across Indian public administration for what a genuine transfer requires is the three Fs — functions, funds and functionaries — and the common pattern is that the first is notified, the second arrives tied to schemes, and the third never moves at all. A department that keeps its staff keeps the work, whatever the notification says.

The two schedules, and the two seams

	Panchayats (Eleventh Schedule)	Municipalities (Twelfth Schedule)
Constitutional part	Part IX, Articles 243 to 243-O	Part IXA, Articles 243P to 243ZG
In force from	24 April 1993	1 June 1993
Subjects listed	29	18
Characteristic subjects	Agriculture, minor irrigation, rural housing, drinking water, poverty alleviation, primary education, public distribution	Urban planning, land-use regulation, water supply, public health and sanitation, fire services, slum improvement, urban poverty alleviation
Deliberative body of citizens	The gram sabha, the registered voters of a village	No equivalent; ward committees are mandatory only in larger municipalities

The rural seam and the urban seam fail differently. A panchayat is typically starved of own revenue and works almost entirely on transfers, so its constraint is money. A municipal corporation in a large city often has a real tax base in property and user charges but shares its territory with parastatal development authorities, water boards and transport corporations that report to the state government rather than to the elected mayor — so its constraint is jurisdiction. That second problem is the institutional form of the capacity gap described in the urban transition brief and in the urbanisation and migration dossier.

Where the amendments do not reach

Part IX does not automatically apply to the Fifth Schedule areas or to the Sixth Schedule tribal areas of the North East. Parliament extended the panchayat provisions to the Scheduled Areas by a separate statute in 1996, in a form adapted to customary institutions and giving the gram sabha a much stronger role — including over land acquisition and minor minerals — than it has under Part IX elsewhere. The Sixth Schedule areas continue under their own autonomous district councils rather than under Part IX. Any statement about “local government in India” that does not carve these out is describing most of the country, not all of it.

The money link upward

The State Finance Commission is the constitutional device for funding the third tier, and it is also the weakest link in the chain, because its recommendations bind nobody and its reports have in many states been late, thin, or not acted on. The national Finance Commission is required to recommend measures to augment a state’s consolidated fund so that the state can supplement local resources, and it has increasingly routed grants to local bodies directly and attached conditions to them. That is a second channel arriving from above, and how it interacts with state-level devolution is set out in the brief on fiscal federalism.

Settled, and contested

Settled: the two amendments, their commencement dates, the mandatory provisions listed above, the permissive wording of the endowment and taxation articles, and the existence of the two schedules. These are constitutional text.

Contested: whether the 1992 design was a devolution that states have failed to execute or a devolution that was never actually made, given that the operative articles left the decision with the states from the start; whether reserving half the seats for women has changed who holds office, who exercises it, or both; whether India’s cities need a directly elected executive mayor with a fixed term rather than the largely ceremonial office most state municipal Acts create; and whether parastatals should be folded under elected local government or kept separate on capacity grounds. These positions are held by state governments, municipal associations, courts and researchers in different combinations. IndiaStand records them and attributes them.

How this connects on IndiaStand

The Union ministries that hold the central end of this are the Ministry of Housing and Urban Affairs for the urban tier and the Ministry of Rural Development for much of the rural programme money. The amendments themselves were made by Parliament under its constituent power, and the electoral machinery they created sits beside, not under, the national commission.

Maintained topic brief. Analysis by IndiaStand — grounded in the constitutional text, with the range of positions attributed and no forecast or recommendation offered.