- Why in news
- On 25 October 2026, NITI Aayog Member Rajiv Gauba addressed the valedictory session of the 2nd National Urban Conclave. He called for empowered city governments and reforms in urban governance, planning and financing.
- What it is
- The 74th Constitutional Amendment (1992) gave constitutional status to urban local bodies and added the Twelfth Schedule, which lists 18 functions for them. Many states have devolved these functions only in part, and municipal finances and elections remain weak. NITI Aayog and MoHUA have produced a report, Moving Towards Effective City Governance, to push reform.
- Urban population projection
- Urban population is projected to rise from about 50 crore now to 85 crore by 2050, when nearly half of Indians will live in cities.
- Functions to be devolved
- States should devolve all 18 functions to urban local bodies in line with the 74th Amendment, including master planning, water supply, fire services and traffic.
- Governance report
- The report Moving Towards Effective City Governance, by NITI Aayog and MoHUA, recommends directly elected mayors with 5-year terms, a Mayor-in-Council system and timely municipal elections.
- Urban Challenge Fund and city economic regions
- The 2025-26 budget announced a ₹1 lakh crore Urban Challenge Fund. This year's budget allots ₹5,000 crore each to 7 city economic regions over five years.
- Central grants to ULBs
- The share of Central Finance Commission grants to urban local bodies has risen to 45% from 36%, but state-to-city fund devolution remains low.
- Constitutional basis
- The 74th Amendment Act, 1992 inserted Part IXA (Articles 243P-243ZG) and the Twelfth Schedule.
Don’t confuse with 73rd vs 74th Amendment: The 73rd Amendment covers panchayats (Eleventh Schedule, 29 subjects). The 74th covers municipalities (Twelfth Schedule, 18 functions).
Don’t confuse with Mayor-in-Council vs directly elected mayor: Mayor-in-Council is an executive committee of councillors headed by the mayor. A directly elected mayor is chosen by voters. The report proposes both.
Why it matters
- Cities drive economic growth, and about 35 crore more people are expected to live in them by 2050.
- Empowered local governments improve service delivery and citizen participation.
Problems
- States have devolved functions, funds and functionaries only in part, and municipal elections are often delayed.
- Municipal revenues are low, with weak property tax and user-charge recovery, and State Finance Commissions are irregular.
Way forward
- States should pass new Municipal Acts that devolve all 18 functions and ensure timely elections.
- MoHUA can link support under urban missions to reforms such as property tax, land pooling, mixed-use zoning and the Model Tenancy Act.
Put in your answer
Urban population projection: Urban population is projected to grow from about 50 crore to 85 crore by 2050.
Central grants share: The share of central finance commission grants to ULBs rose to 45% from 36%, yet state devolution lags.
74th Amendment: The 74th Constitutional Amendment gave constitutional status to urban local bodies and added the Twelfth Schedule.
- 2023Mains GS2 · Q3Comment on states' reluctance to empower urban local bodies functionally and financially
- 2024Mains GS2 · Q5Analyse urban local bodies' role in good governance and merging rural and urban bodies
- 2013Mains GS2 · Q7Discuss 13th Finance Commission recommendations strengthening local government finances
- 2019Prelims Q59Which statement about Solid Waste Management Rules 2016 applicability is correct
- 2012Prelims Q33Which features of the 13th Finance Commission recommendations, including devolution to local bodies
- 2017Prelims Q60Which statements about UN-Habitat's mandate for sustainable towns and cities
UPSC’s own questions that come close to this issue, from our Prelims and Mains banks.
No practice question for this one; the card may still help an answer. Why: Urban governance and finance is a syllabus topic, but this is a speech with projections and no new decision; UPSC is unlikely to set a question on this item.
Worth revising until Prelims 2028: most news questions come within two years of the event.