74th Amendment Act of 1992

🌆 Introduction

Before 1992, municipalities existed — but only as creations of state laws.
They could be created, modified, or dissolved at the will of the state government.

To correct this, the 74th Constitutional Amendment Act, 1992 was passed.
It came into force on 1 June 1993 and did three major things:

1. Added a new Part IX-A to the Constitution — titled “The Municipalities” (Articles 243-P to 243-ZG).
2. Added the Twelfth Schedule — containing 18 functional items related to the work of municipalities (linked to Article 243-W).
3. Gave constitutional status to the urban local bodies, making it mandatory for all states to establish municipalities according to constitutional norms.

In short, after the 74th Amendment, Urban Local Government became a justiciable part of the Constitution — states were no longer free to ignore it.

👉 Objective:
To revitalise and strengthen the system of urban self-government, making it more democratic, accountable, and effective.

⚙️ Salient Features of the 74th Amendment Act

Let’s discuss its important provisions one by one 👇

🏙️ Three Types of Municipalities (Article 243-Q)

The Act provides for three categories of municipalities in every state:

1. Nagar Panchayat – for a transitional area (rural → urban).
2. Municipal Council – for a smaller urban area (towns).
3. Municipal Corporation – for a larger urban area (big cities).

👉 Exception:
If an urban area is under an industrial establishment (like a PSU township providing its own civic amenities),
then the Governor can declare it as an industrial township, and in such a case, no municipality needs to be constituted.

📍 Governor’s Criteria for Classifying Urban Areas:

While specifying whether an area is transitional, smaller, or larger, the Governor considers:

1. Population size
2. Population density
3. Revenue generated for local administration
4. Percentage of employment in non-agricultural sectors
5. Economic importance
6. Any other relevant factors deemed fit

👥 Composition of Municipalities (Article 243-R)

All members of a municipality are directly elected by the people of that area.

• Each municipal area is divided into wards (territorial constituencies).
• One member is elected from each ward on the basis of adult franchise.
• The State Legislature decides how the Chairperson (Mayor or President) is to be elected — either directly by the people or indirectly by the elected members.

The State Legislature may also include the following as non-elected members:

1. Experts – persons with special knowledge or experience in municipal administration (without voting rights).
2. MLAs & MPs – members of Lok Sabha and State Legislative Assembly representing constituencies within the municipal area.
3. Rajya Sabha & MLCs – those registered as electors within the municipal area.
4. Chairpersons of committees (other than ward committees).

🧩 Wards Committees (Article 243-S)

• In municipalities with population ≥ 3 lakh, a Wards Committee must be set up.
• It may cover one or more wards.
• The State Legislature decides:
  • its composition,
  • territorial area, and
  • the method of filling seats.

Wards Committees help decentralise governance even within large cities — bringing administration closer to citizens.

🏘️ Other Committees

The State Legislature may create additional committees for special purposes —
for example, committees for sanitation, transport, or urban planning.
The Chairpersons of these committees can also be made members of the municipality.

⚖️ Reservation of Seats (Article 243-T)

Just like in Panchayati Raj institutions, reservation applies here too.

1. For Scheduled Castes (SCs) and Scheduled Tribes (STs) – in proportion to their population in the municipal area.
2. For Women – not less than one-third (33%) of total seats, including those reserved for SC/ST women.
3. For Chairpersons – State Legislature decides the manner of reservation for SCs, STs, and women.
4. For Backward Classes (OBCs) – States may provide reservation if they choose to.

🕒 Duration of Reservation:

The reservation for SCs and STs (both seats and chairpersons) will cease after the period specified in Article 334,
which is presently 80 years from the commencement of the Constitution — i.e., till 2030.

⏳ Duration of Municipalities (Article 243-U)

• Every municipality has a 5-year term from the date of its first meeting.
• It can be dissolved earlier by the State Government, but with certain safeguards.

Fresh Elections:

• Must be held before the expiry of the 5-year term, OR
• If dissolved early, then within 6 months from the date of dissolution.

👉 Exception:

If the remaining term of the dissolved municipality is less than 6 months, elections need not be held.

Further:

• The new municipality formed after premature dissolution will only continue for the remaining period (not a fresh 5 years).

Additional Safeguards:

1. Before dissolution, the municipality must be given an opportunity of being heard.
2. No amendment of any law can cause dissolution before completing 5 years.

🚫 Disqualifications (Article 243-V)

A person is disqualified from being chosen or continuing as a member of a municipality if:

1. He/she is disqualified under any law for elections to the State Legislature, or
2. He/she is disqualified under any state law specifically made for municipal elections.

🧠 Note:

• The minimum age for becoming a member is 21 years (even though it’s 25 years for MLAs).
• Any question about disqualification is decided by an authority specified by the State Legislature.

🗳️ State Election Commission (Article 243-ZA)

To ensure free and fair elections, the Act establishes a State Election Commission (SEC) in every state.

Powers:

• It has superintendence, direction, and control over:
  • Preparation of electoral rolls, and
  • Conduct of all municipal elections.

The State Legislature may make laws to regulate all matters relating to municipal elections.

So, just as the Election Commission of India conducts elections for Parliament and State Assemblies,
the State Election Commission conducts elections for Panchayats and Municipalities.

🏗️ Powers and Functions of Municipalities (Article 243-W)

The State Legislature may empower municipalities with the authority needed to function as “institutions of self-government.”

This includes:

1. Preparation of plans for economic development and social justice, and
2. Implementation of schemes for economic development and social justice,
   — including those related to the 18 matters in the Twelfth Schedule.

📘 The Twelfth Schedule covers urban subjects like:

• Urban planning,
• Water supply,
• Public health,
• Slum improvement,
• Urban forestry,
• Roads, bridges, etc.

(We’ll study this Twelfth Schedule in detail later.)

💰 Finances of Municipalities (Article 243X)

Now friends, remember — local bodies cannot function without financial autonomy.
So, this Article gives the State Legislature the power to decide how municipalities will be financed.

It may provide for the following:

1. Authorization to levy, collect, and appropriate taxes, duties, tolls, and fees.
   → Example: Property tax, water tax, or parking fees.
2. Assignment of taxes collected by the State Government to municipalities.
   → Example: A share of entertainment tax or stamp duty.
3. Grants-in-aid from the Consolidated Fund of the State.
   → These are regular financial transfers by the state to support municipalities.
4. Creation of municipal funds — all the money of municipalities is credited to these funds.

👉 In essence, this Article ensures that urban local bodies are not dependent entirely on the mercy of the State Government — but have their own legitimate sources of revenue.

🧾 Finance Commission (Article 243Y)

The State Finance Commission (SFC) — which also reviews the finances of Panchayats — is required to review the financial position of Municipalities every five years.

It makes recommendations to the Governor on the following:

1. Principles of revenue sharing:
   • How to divide the net proceeds of state taxes, duties, tolls, and fees between the State and Municipalities.
   • How to allocate shares among different levels of municipalities.
2. Taxes, duties, tolls, and fees that may be assigned to municipalities.
3. Grants-in-aid from the State’s Consolidated Fund.
4. Measures to improve the financial position of municipalities.
5. Any other matter referred to it by the Governor for the sound finance of municipalities.

➡️ The Governor must place the Commission’s recommendations and an Action Taken Report before the State Legislature.

🏦 Role of the Central Finance Commission (Article 280)

The Central Finance Commission (constituted under Article 280) also has a role.
It suggests measures to augment the Consolidated Fund of the State to supplement municipal resources, based on the recommendations of the State Finance Commission.

👉 Thus, there is a link between the Central and State Finance Commissions for strengthening local finances.

📚 Audit of Accounts (Article 243Z)

To ensure financial accountability, the State Legislature may make laws regarding:

• The maintenance of accounts by municipalities, and
• The auditing of such accounts.

This ensures transparency — because accountability is the soul of local self-government.

🇮🇳 Application to Union Territories (Article 243ZB)

The provisions of Part IX-A also apply to Union Territories.

However, the President may direct that these provisions apply with exceptions and modifications as deemed necessary.

👉 For instance:
In 2001, the President directed that Articles 243ZD (District Planning Committee) and 243ZE (Metropolitan Planning Committee) shall not apply to Delhi (NCT).

🏔️ Exempted Areas (Article 243ZC)

The Act does not apply to:

1. Scheduled Areas and Tribal Areas under the Fifth and Sixth Schedules.
2. The Darjeeling Gorkha Hill Council in West Bengal.

However, the Parliament may extend the provisions of Part IX-A to such areas with suitable modifications, if it thinks fit.

🗺️ District Planning Committee (DPC) (Article 243ZD)

This is an important integrative provision.
It seeks to link rural and urban planning at the district level.

🧩 Key Features:

• Every State must constitute a District Planning Committee (DPC) in every district.
• Its purpose is to consolidate the plans prepared by Panchayats and Municipalities and prepare a Draft Development Plan for the entire district.

🏗️ The State Legislature decides:

1. The composition of the DPC.
2. The manner of election of its members and Chairperson.
3. Its functions related to district planning.

📊 Composition (as per the Constitution):

• Four-fifths (4/5) of the members are elected by and from among the elected members of Panchayats and Municipalities in the district.
• The representation must be proportionate to the rural–urban population ratio in the district.

🧭 Functions:

While preparing the draft development plan, the DPC must:

1. Consider matters of common interest — e.g., spatial planning, resource sharing, infrastructure development, environmental conservation.
2. Take into account the available resources — both financial and others.
3. Consult institutions/organizations specified by the Governor.

Finally, the Chairperson of the DPC forwards the development plan to the State Government.

🏙️ Metropolitan Planning Committee (MPC) (Article 243ZE)

This provision applies to Metropolitan Areas — i.e., urban agglomerations with a population of 10 lakh or more.

Each such area must have a Metropolitan Planning Committee (MPC) to prepare a draft development plan for the metropolitan region as a whole.

🔧 The State Legislature decides:

1. Composition of the MPC.
2. Manner of election of its members and Chairperson.
3. Representation of the Central and State Governments and other organisations.
4. Functions of the MPC relating to planning and coordination.

👥 Composition (as per Constitution):

• Two-thirds (2/3) of MPC members are elected by and from among the elected members of Municipalities and Panchayats in the metropolitan area.
• Their representation must be proportional to the population ratio between the urban and rural areas.

🧭 Functions:

While preparing the draft development plan, the MPC must:

1. Consider the plans of Municipalities and Panchayats in that area.
2. Address common issues like spatial planning, resource sharing, infrastructure, and environment.
3. Take into account national and state-level objectives and priorities.
4. Consider likely investments by Central/State agencies and other resources.
5. Consult organisations/institutions specified by the Governor.

Finally, the Chairperson forwards the plan to the State Government.

📜 Continuance of Existing Laws and Municipalities (Article 243ZF)

• All existing municipal laws continue for one year from the commencement of the 74th Amendment (i.e., from 1 June 1993).
• Within this one year, States must adopt the new system of municipalities as per the Act.
• Existing municipalities continue until their term ends, unless dissolved earlier.

Thus, states were given a transition period to adjust to the new constitutional framework.

⚖️ Bar to Interference by Courts (Article 243ZG)

To ensure electoral independence and avoid unnecessary judicial delays:

• The validity of any law regarding delimitation of constituencies or seat allotment cannot be challenged in any court.
• No election to a municipality can be questioned except through an election petition, filed before the authority specified by the State Legislature.

👉 So, courts cannot interfere in election matters directly — only the prescribed legal process can.

🏗️ The Twelfth Schedule (Article 243W)

Now, this is the functional heart of the municipalities.
It specifies 18 subjects on which municipalities can make plans and implement schemes.

Let’s list them (and group them conceptually for easy recall):

Theme	Functions
Urban Planning & Land Use	1. Urban planning including town planning 2. Regulation of land use and construction of buildings
Economic & Social Development	3. Planning for economic and social development
Infrastructure & Public Utilities	4. Roads and bridges 5. Water supply for domestic, industrial, and commercial purposes 6. Public health, sanitation, conservancy and solid waste management 7. Fire services
Environment & Ecology	8. Urban forestry, protection of environment, and promotion of ecological aspects
Social Welfare	9. Safeguarding interests of weaker sections (including handicapped and mentally retarded) 10. Slum improvement and upgradation 11. Urban poverty alleviation
Recreation & Culture	12. Provision of urban amenities (parks, gardens, playgrounds) 13. Promotion of cultural, educational, and aesthetic aspects
Regulation & Civic Services	14. Burials and cremations 15. Cattle ponds, prevention of cruelty to animals 16. Registration of births and deaths 17. Public amenities (street lighting, parking lots, bus stops, public conveniences) 18. Regulation of slaughter houses and tanneries

👉 In simple words:
All functions that make a city liveable, clean, and humane fall under these 18 items.

🎯 Final Thought

Friends, the 74th Constitutional Amendment is not just about urban administration —
it’s about deepening democracy into every street and ward of our cities.

Just as the 73rd Amendment empowered the village citizen,
the 74th empowered the urban citizen.

Together, they represent India’s vision of democratic decentralisation —
where governance truly begins from the grassroots and reaches upward, not downward.