CAG Highlights Key Challenges in Urban Local Bodies

Source: This post on CAG Highlights Key Challenges in Urban Local Bodies Across 18 States has been created based on the article “What is ailing urban local bodies in 18 states: CAG flags 42% resource-expenditure gap, 37% staff vacancy” published in Indian express on 16th November 2024.

Why in news?

Recently, the CAG released a compendium of audit reports into the implementation of the 74th amendment in 18 states.

CAG Report Insights

1. Significant Resource-Expenditure Gap: Urban local bodies in 18 states face a 42% gap between their available resources and expenditures. Only 29% of their expenditure is directed towards programmatic and developmental work.

2. Incomplete Implementation of the 74th Constitutional Amendment: The 74th Amendment, enacted in 1993 to empower urban local bodies, has not been fully implemented in these states even after 31 years.

3. While 17 out of 18 designated functions have been devolved on average, the spirit of the law has been weakly adhered to. Critical functions like urban planning and fire services are the least devolved.

4. Revenue Challenges: On average, only 32% of ULB revenue comes from their own resources; the remainder is funded by the Union and state governments. Urban local bodies are able to realize only 56% of the property tax demand, indicating inefficiencies in revenue generation.

5. Staff Shortages: There is an average 37% vacancy in sanctioned staff positions within ULBs. ULBs in 16 states have limited or no authority over their recruitment processes, compounding workforce challenges.

6. Limited Autonomy: Only four functions devolved to urban local bodies are handled with complete autonomy. The lack of full autonomy undermines the effective functioning of ULBs in critical areas.

7. Devolution Status Across States: Nine states — Chhattisgarh, Haryana, Jharkhand, Madhya Pradesh, Maharashtra, Manipur, Odisha, Punjab, and Tripura have devolved all 18 functions under the 74th Amendment. However, compliance with the “in-spirit” implementation remains weak.

8. Developmental Implications: With 50% of India’s population projected to live in cities by 2050, the lack of robust and autonomous ULBs jeopardizes urban governance and the quality of life for citizens.

Recommendations by CAG

1. Strengthen Urban Planning and Governance: Involve ULBs in critical functions like planning to ensure effective governance.

2. Enhance Resource Mobilization: Improve ULBs’ revenue generation capabilities, especially in property tax collection.

3. Empower ULBs: Provide complete autonomy in critical functions and ensure adequate staffing.

4. Collaborative Approach: States must work with stakeholders across government, civil society, and academia to establish vibrant and efficient urban governance systems.

UPSC Syllabus: Polity and nation