Dynamics of Urban Governance: Types and Functions of ULBs in India

Every time a pothole on your street gets filled, your neighbourhood park is cleaned, or a new flyover eases your daily commute, there is a specific institution behind that work – an Urban Local Body (ULB). These are the governmental structures closest to city and town residents, responsible for the basic services that shape everyday life. India is urbanising at a remarkable pace: according to the World Bank, by 2036, an estimated 600 million people will be living in India’s urban centres, representing 40 percent of the national population. Understanding how ULBs are structured and what they are expected to do is not just useful civic knowledge – it is foundational to understanding how democratic self-governance actually functions at the local level in India.

What are urban local bodies? 🔗

Urban Local Bodies are institutions of local self-governance created to manage the administration and development of urban areas – cities, towns, and semi-urban settlements. They are the third tier of government in India, sitting below the central and state governments. Their job is wide-ranging: from supplying clean water and collecting garbage to regulating building construction and planning the city’s future.

The concept of urban governance in India has old roots. The first municipal corporation on the Indian subcontinent was established in Madras (now Chennai) in 1687 by the British, followed by corporations in Calcutta and Bombay in 1726. However, these early bodies were colonial instruments, not democratic institutions. The shift to genuinely elected, constitutionally recognised local governance came much later.

The constitutional backbone: 74th amendment act of 1992 🔗

Before 1992, urban local bodies existed in India but had no constitutional protection. State governments could suppress them, delay elections, or override their decisions without any constitutional check. That changed fundamentally with the 74th Constitutional Amendment Act of 1992, which came into force on 1 June 1993.

This landmark legislation inserted Part IXA (Articles 243P to 243ZG) into the Constitution, granting ULBs constitutional status and making their establishment legally mandatory for every state. It also added the 12th Schedule, listing 18 specific functions that municipalities are empowered to perform – covering everything from urban planning and regulation of land use to slum improvement and urban poverty alleviation.

The amendment also mandated elections every five years, reserved seats for Scheduled Castes, Scheduled Tribes, and women (at least one-third of total seats), and required the formation of Ward Committees in all municipalities with a population of three lakh or more. It set up State Finance Commissions to periodically review the financial health of ULBs and recommend an equitable sharing of state revenues with them. In short, the 74th Amendment transformed ULBs from administrative conveniences into constitutionally guaranteed democratic institutions.

Types of urban local bodies in India 🔗

After the 74th Amendment, three main categories of ULBs were formally recognised: Municipal Corporations, Municipal Councils (also called Municipalities), and Nagar Panchayats. Each is designed for a different level of urbanisation. States retain the authority to classify any given area into one of these categories based on factors like total population, population density, revenue generation potential, and the share of employment in non-agricultural activities.

Municipal corporations 🔗

Municipal Corporations are the largest and most powerful form of ULB, established for metropolitan cities with a population generally exceeding one million. Think of Delhi, Kolkata, Mumbai, Chennai, or Bengaluru – cities with huge populations, complex infrastructure needs, and substantial budgets. These corporations enjoy a greater degree of fiscal autonomy than other ULBs and deal directly with state governments.

Structurally, a Municipal Corporation has two distinct wings. The first is the Council (the deliberative or legislative wing), composed of directly elected Councillors representing different wards of the city. The Council is headed by the Mayor, who is the ceremonial head and the city’s “first citizen.” The second wing is led by the Municipal Commissioner, typically an IAS officer appointed by the state government, who serves as the executive head and manages day-to-day administration – from finances to staff deployment. Standing Committees overseeing specific domains like finance, public works, health, and education assist both wings in their work.

Mumbai’s Brihanmumbai Municipal Corporation (BMC), established in 1882, is recognised as one of India’s wealthiest municipal corporations and a prominent example of large-scale urban governance in action.

Municipal councils (municipalities) 🔗

Municipal Councils govern smaller towns and cities – those with populations that are typically between 25,000 and 300,000. They have a structure similar to that of Municipal Corporations but with comparatively fewer powers and a smaller administrative apparatus. The elected council is headed by a Chairperson (or President), assisted by a Vice-Chairperson. A Chief Officer (or Chief Executive Officer) appointed by the state government handles executive functions, much like the Municipal Commissioner does for a Corporation.

Municipal Councils are responsible for providing essential urban services in their jurisdiction – water supply, sanitation, local roads, public health, and basic infrastructure. They interact with state governments not directly but through the Directorate of Municipalities or through the district collector, which means they have comparatively less administrative independence than corporations.

Nagar panchayats 🔗

The Nagar Panchayat is the smallest category of ULB, specifically designed for areas that are in transition from rural to urban – settlements that are no longer entirely village-like but have not yet grown into a proper town. These are areas where agricultural activity is declining, population density is rising, and basic urban services are beginning to be required.

Nagar Panchayats are governed by a Chairperson-in-Council system, with a Chairperson as head and a Vice-Chairperson to assist. Their primary role is to introduce urban services – street lighting, solid waste collection, basic road infrastructure – to communities making the rural-to-urban transition. As an area develops further and its population grows, a Nagar Panchayat is typically upgraded to a Municipal Council.

Key functions of urban local bodies 🔗

The 12th Schedule of the Constitution lists 18 functional items assigned to municipalities. These functions broadly fall into two traditional categories: obligatory functions (what a ULB must do) and discretionary functions (what it may do, subject to available resources).

Core service delivery 🔗

At the most basic level, ULBs are responsible for ensuring that residents have access to clean drinking water, functioning sanitation systems, and solid waste disposal. These are non-negotiable obligations. Water supply – ensuring continuous and safe delivery to all households – is one of the most resource-intensive responsibilities a ULB carries. Equally critical is waste management: collecting, transporting, and processing solid waste, maintaining sewerage networks, and keeping public spaces clean.

Public health is another core obligation. ULBs manage municipal hospitals and dispensaries, run immunisation drives, and are responsible for controlling the spread of communicable diseases within their jurisdictions. Road maintenance, street lighting, and the upkeep of public parks and open spaces also fall under this category of essential services.

Urban planning and development 🔗

Beyond day-to-day services, ULBs are formally tasked with the long-term physical development of their urban areas. The primary instrument for this is the Master Plan – a comprehensive, long-term blueprint for the city’s physical and social development. It guides land use, zoning decisions, road networks, and future expansion corridors. Bengaluru’s Revised Master Plan, for instance, governs how the city’s infrastructure and expansion zones are to be developed over the coming decades.

ULBs also regulate land use and building construction – approving building plans, ensuring structures conform to zoning laws, and preventing encroachment on public land. This regulatory function is critical to preventing chaotic, unplanned growth that leads to congestion, unsafe structures, and environmental degradation.

Economic development and social welfare 🔗

Municipal bodies are also responsible for promoting local economic activity. This includes setting up and maintaining public markets, supporting small businesses, and creating urban amenities that attract investment. Some large corporations run city bus services – Mumbai’s BEST bus network, for example, is operated by the municipal corporation. ULBs also manage municipal schools, public libraries, and community halls.

Social welfare functions include implementing poverty alleviation schemes, providing affordable housing for low-income groups, improving slum conditions, and running programmes targeted at marginalised communities. These responsibilities connect ULBs directly to the daily quality of life of the most vulnerable urban residents.

Special purpose agencies and other urban bodies 🔗

Beyond the three main categories, India also has several other forms of urban governance institutions. Cantonment Boards govern civilian populations in military areas – India currently has 62 cantonment boards, including those in Delhi, Pune, and Secunderabad. Township Committees are established by large public enterprises to manage civic services for their employees, with no elected members. Port Trust Boards manage civic administration in and around major ports.

There are also Special Purpose Agencies (SPAs) – bodies created by state governments to handle specific urban functions that technically belong to ULBs but are administered separately. Water Supply and Sewerage Boards, Housing Boards, Electricity Supply Boards, and City Transport Boards are prominent examples. Unlike area-based ULBs, SPAs are function-based: they exist to deliver one specific service and operate independently of the municipal corporation or council in their area.

Financial framework and ongoing challenges 🔗

ULBs generate their own revenues through property tax, professional tax, fees for services, and local levies. They also receive grants from state and central governments. However, their financial capacity has historically been weak. Central and state governments finance over 75 percent of city infrastructure, while ULBs contribute only about 15 percent through their own revenues, with private sources accounting for just 5 percent.

This financial gap has real consequences. A World Bank analysis found that central and state governments finance 72 percent of urban infrastructure, with commercial financing providing a negligible share. The result: many ULBs struggle to expand services fast enough to match population growth. India’s urban population is projected to increase dramatically by 2050 – adding more people to its cities than are currently residing in them – creating enormous pressure on already-stretched local governments.

The implementation of the 74th Amendment itself has been uneven. Even 25 years after the amendment, only 11 states had devolved municipal functions to ULBs to the extent envisioned by the law. Overlapping jurisdictions between ULBs and state-level Special Purpose Agencies further dilute accountability and create coordination gaps in service delivery.

Despite these challenges, standout examples of effective ULBs do exist. The Ahmedabad Municipal Corporation pioneered a Bus Rapid Transit system through public-private partnership. Surat Municipal Corporation’s use of technology to track infrastructure projects and manage emergencies has been widely recognised. Pune Municipal Corporation’s door-to-door waste collection programme has been cited as a model for other cities. These examples illustrate what is possible when adequate resources, political will, and administrative capacity come together.

What do you think? As India’s cities grow faster than ever, the role of Urban Local Bodies becomes more critical – yet many still struggle with limited funds and unclear authority. Should the 74th Amendment be strengthened to enforce stricter devolution of powers from states to ULBs? And given that Special Purpose Agencies often take over functions that technically belong to municipal bodies, does this fragmentation ultimately weaken democratic accountability at the city level?

References

1. https://www.worldbank.org/en/news/press-release/2022/11/14/india-s-urban-infrastructure-needs-to-cross-840-billion-over-next-15-years-new-world-bank-report
2. https://en.wikipedia.org/wiki/Municipal_governance_in_India
3. https://mahadma.maharashtra.gov.in/en/74th-constitutional-amendment-and-urban-local-bodies-in-india/
4. https://vajiramandravi.com/upsc-exam/urban-local-bodies/
5. https://pubadmin.institute/decentralisation-and-local-governance/organizational-structure-urban-local-bodies-india
6. https://clearias.com/74th-amendment-act/
7. https://byjus.com/free-ias-prep/municipalities-74-amendment-act-1992/
8. https://pubadmin.institute/administrative-system-at-state-and-district-levels/structure-functions-urban-local-bodies-india
9. https://www.nextias.com/blog/urban-local-government/
10. https://www.worldbank.org/en/news/opinion/2024/01/30/gearing-up-for-india-s-rapid-urban-transformation
11. https://www.brookings.edu/articles/india-2024-an-urban-india/
12. https://prepp.in/news/e-492-74th-constitutional-amendment-act-indian-polity-upsc-notes