"Municipal corporations are key to urban governance, yet states often show reluctance to empower them functionally and financially". In this context, examine the key challenges faced by municipal corporations and suggest measures for a paradigm shift in urban local governance.

(1) Represents wishes of people → democratically elected (2) Understands people's problem more effectively → are one from amongst people only. (3) Can provide local solution to local problems [e.g.] Indore's → Dwan Praday Yojana.

Challenges faced by corporations (1) Reluctance to empower functionally (i) Non transfer of functions [e.g.] MCD has only 4/18 devolved subjects (ii) Creation of parallel agencies (work in parallel) [e.g.] Indore Development Corporation (IDDC) (iii) Non-powerful Mayor → all the powers vested in the Chief Magistrate (no power to Mayor) (iv) Lack of devolution in cases of scheme implementation.

(2) Reluctance to empower financially (i) Own funds → only 5% of total revenue. (ii) CAG Report → stuck in "low equilibrium trap" for finances (iii) Municipal Bonds → only 1% of GDP (vs 10% in USA) (iv) Non-constitution of finance Commission & non implementation of reports [e.g.] Karnataka 4th SFC

Measures Suggested

1. Economic Survey 2022-23 i) Developing Municipal Bond Market ii) Pooling based financial mechanism for corporation
2. Devolution of functions to corporation
3. Strengthening office of Mayor
4. Bottom up planning by the 'ward committees' in urban area