Challenges of Urban Government: Issues and Approaches


As the world is witnessing increasing urbanization, there is growing importance of cities in national economy and development. With rising urbanization, conventional methods of governing the city with top-down approaches have proved to be restrictive and inadequate. There has been increasing demand for avenues for participation, to increase transparency, modernize administration and improve service delivery. There is a need to adopt new systems and methods of governing cities that are inclusive and facilitate active and effective participation of stakeholders. There is also a realization that the existing capacity of the urban local bodies is limited and needs to substantially enhanced.


Historical Background

History of urban governance in India dates back to the year 1687 with the formation of Madras Municipal Corporation and then Bombay and Calcutta Municipal Corporation in 1726. In early nineteenth century almost all towns in India had some form of municipal governance. In 1882, the then Viceroy of India, Lord Ripon’s resolution of local self-government laid the democratic forms of municipal governance in India.

In 1919, the need of the resolution was incorporated in a Government of India act and the powers of democratically elected government were formulated. In 1935, local government was brought under the purview of the state or provincial government and specific powers were given under another Government of India act. There was a shift of political attention at the national level that took place after Independence in 1947 which had adverse consequences on both federalism and local government in India. Politically therefore, municipal institutions were important during a short period of only 16 years between 1919 and 1935.

During post-independence era, in 1992, constitutional status to local governments under a liberalized economic regime was accorded with the passage of constitutional amendments in Indian Parliament. As in the past, major reforms for local government are still being initiated by the central government rather than by the states within which local governments operate under the Constitution.

What is Urban Governance?

The term ‘Governance’ has wider meaning and implications compared to the term ’Government’. Government refers to the institutional arrangements of exercising the sovereign power for serving the internal and external interests of the political community. On the other hand, Governance refers to the process as well as the result of making authoritative decisions for the benefit of the society. It refers to how government and stakeholders decide to plan, finance and manage urban areas. It is a political process with the continuous involvement of negotiations over the allocation of resources and power.

It can be defined as “the sum of the many ways individuals and institutions, public and private, plan and manage the common affairs of the city. It is a continuing process through which conflicting or diverse interests may be accommodated and cooperative action can be taken. It includes formal institutions as well as informal arrangements and the social capital of citizens.” (Rao, 2004: 52)

Governance has a lot of significance in public administration and it involves a number of actors and institutions. According to Slack and Côté (2014:7), urban governance:

  • plays a critical role in shaping the physical and social character of urban regions;
  • influences the quantity and quality of local services and efficiency of delivery;
  • determines the sharing of costs and distribution of resources among different groups; and
  • affects residents’ ability to access local government and engage in decision-making, influencing local government accountability and responsiveness to citizen demands.

Some of the characteristics of good governance are citizen’s involvement and participation, transparency in the decisions taken, accountability of actions taken, efficiency of service delivery, equity and social inclusion, respect for the rule of law etc.

Also Read: Urban Governance in India: Emerging Challenges and New Approaches

Why is Urban Governance required?

Managing cities and urban growth is one of the major challenges in present scenario. If the cities are managed well, they can become the engines of growth and provide inhabitants with better facilities and opportunities such jobs, healthcare, housing, safety, social development etc. Moreover, cities can contribute to national growth through increased revenue generation and political stability. On the other hand, if the cities are poorly planned, managed and governed they can become centers of poverty, inequality and conflict.

Urban governance through local political processes can even lead to betterment of the urban poor by facilitating access to economic opportunities, improving social networks and access to land, providing infrastructure and services. Whereas, ineffective urban governance can affect the poor disproportionately. For instance, oppressive regulations of informal enterprises and settlements can negatively impact upon their livelihood opportunities.

Following three key messages by Venables underlines the need of governance matters (Venables, 2015):

  • The scale and high population density of cities enable economic and social interaction to occur more frequently and effectively. This creates the potential for cities to be productive and to offer inhabitants a better quality of life.
  • To unlock this potential, key issues surrounding land, transport, public finance and regulation need to be addressed. Making the city work requires investment in residential, commercial and industrial structures supported by a combination of effective land markets, appropriate regulation, good public services, adequate public finance and transparent and accountable city level political systems.
  • Harnessing urbanization requires smart policy and hard work (i.e. effective urban governance), and the implications of failure are long term.

Urban scenario in India

While large share of India’s population remains substantially rural, it is emerging as one of the fastest urbanizing countries in the world and has already a huge urban population of around 285 million. It is estimated that by the middle of this century or maybe earlier, the country would reach the same milestone that the world had reached at the beginning of the century of becoming more urban than rural. The economic base of the nation has already been shifted to urban centers through expanding industries, trade, commerce and services.

India is at a crucial point in the process of urbanization. At present, India is among the countries which is at a low level of urbanization. In 1991, only 26% of the population was living in urban areas. While in 2001, only one-third of the country’s population was living in urban areas. The urban population is projected to increase up to 40% by 2021. Nonetheless, even at such low level of urbanization in the country, total urban population in absolute value is very large. The magnitude is so high that if urban India was considered a separate country then it would be the fourth largest country in the world.

In 1991, out of the 20 largest cities in the world, three were from India – Mumbai, Calcutta and Delhi. In 2001, 20 largest metropolises were from India. In 1991, there were 23 million plus cities in India which increased to 40 in 2001. Currently the number is 53 which is expected to rise to 70 in 2021. Hence, the task of urban development which is of huge magnitude requires special attention.

Urbanization rate of India has usually remained between 3% to 4%. The natural growth of population has remained stable at about 2.1% per annum during past three census decades. Rural – urban migration can be thus attributed as the factor for urban growth. The average growth rate per annum is higher for larger cities than lower order towns.

Indian cities have strongly emerged as the prime engines of economy and generators of national wealth. As stated by National Commission, urbanization is inevitable for economic change. The cities are considered as the backbone of national economy. The contribution of the urban sector to national economy has increased from 29% in 1951 to 55% in 1991 and 60% in 2001. Thus the contribution of urban economy to national economy is significantly higher compared to the level of urbanization which relatively low. The urban planners and policy makers have therefore been focusing on the development of such urban centers that would link Indian economy with the global economy in the period of economic globalization and liberalization since 1991.

Importance of Local Government in Urban Governance

Local government is the tier of government which is closest to the people as compared to the other tiers. Local government thus is an important part of urban governance to be considered. It is a system under which the people of a locality possess certain responsibilities of public urban affairs and money generation to meet their expenses. The goal of the local government is the betterment or welfare of every citizen. It is due the public requirements which are local in their intensity, charter and scope that makes the role of local government important. It provides an extensive range of services to the people and performs functions of huge variety and magnitude. Local government ensures a two-way communication between the state government and plans and programmes of the state and central government flow in reverse direction. Thus it can be said that local government forms an important part of urban governance and contributes to resilience, strength and richness of democracy by promoting diversification of political experience and by setting itself as another center of creative activity through democratic action.

a. Evolution of Local Government Bodies – Post Independence Era

With the end of British rule, there was self-government established at all the levels – center, state and local. Since Independence, more important legislations were passed to shape local self-government.

Although there was a growth in the number of local government bodies and their role in the system of administration, there was no corresponding development of their effectiveness. The main factor for this state was the inadequacy of financial resources available to them. As a result, post-Independence era has witnessed numerous remarkable attempts for reform at the level of urban government. However, most of the thinking on municipal reforms remained confined to financial resources only. As a result, they have failed in dealing with the dynamic growth created by the process of steady urbanization and urban growth. In regard to this, the National Commission on Urbanization made recommendations in 1985 about the need for measures required for strengthening urban local government institutions in the country. The need for an independent status to urban local government had been considered to take the government to the people and to ensure people’s participation in the participation.

In order to achieve these objectives, the union government introduced the Constitution (65th Amendment) Bill in 1989 which could not be passed due to dissolution of Lok Sabha. Another bill which is the 72nd Amendment was introduced by the succeeding Janata Party government and met with the fate. Again in 1991, another bill (73rd Amendment) was introduced and passed in 1992. It was approved by majority of the states and after the Presidential assent, it came into force with effect from 1993 as the constitution (74th Amendment) Act.

b. Constitution 74th Amendment

The 74th Constitution Amendment Act is a landmark in the history of urban local government in the country. The representative character of local bodies is ensured. The act provides the mandatory as well as discretionary provisions which were to be adopted compulsorily throughout the country. Thus the urban local government has been given a face lift by the constitution itself in the country.

It aims at systematic Constitution of the urban sector with proper representation to all sections of society. It devolves a constitutional status on the local governments for the first time in history of India. Local government will no longer be formed as an arm of the state but rather be formed as per the Constitutional process and state laws subject to the process. The 74th Constitutional Amendment Act (CAA) is to bestow power to people, to plan for themselves and participate in the decision making process.

Salient Features of Constitution 74th Amendment Act

  1. The act mandated set up of three grades of municipal bodies in the country – nagar panchayat, municipal council and municipal corporation.
  2. Five-year tenure of urban local bodies.
  3. Ward committees were mandated in case of cities with more than 3 lacs population.
  4. Zonal committees had no specific mention and were open to the state governments to form other committees.
  5. Seats were reserved for SCs, STs and women.
  6. Representation of Members of Parliament and Members of Legislature Assemblies was left to the discretion of the states.
  7. Setup of separate State Election Commissions to conduct elections.
  8. Elections for the positions of mayors and municipal presidents to be decided by the states.
  9. Removal of chairpersons to be decided by the states.
  10. Draft of Development Plan to be prepared for the metropolitan area as a whole. Metropolitan planning to be extended to all cities with more than 10 lakh population.
  11. A new clause was added to amend Article 280 of the constitution. It became necessary for the states and the State Finance Commissions to take note of the needs of the rural and urban local bodies to reflect the same in their own report to the Central Finance Commission.

Issues of Urban Governance

There are many issues related to urban governance which needs to be considered and resolved for good urban governance. At large, there are two major issues that to be focused in the country. First is that there are 3,697 urban centers in India as per 1991 census and their numbers will probably increase to 5000 in 2021. Out of these, 92% are small and medium towns and less no. of urban centers have million plus population. Secondly, it is found that handling of urban development is a very delicate issue and has to be strategically handled, so that the urban fabric does not get affected and its users get utmost benefits, convenience and a comfortable life. India has one planner per four lakh citizens as compared to 48 in the United States and 148 in the United Kingdom. Poor urban planning and governance can cost a country 3% of its GDP.

Common problems that impact the functioning of most Indian cities area multiple jurisdictions, weak revenue base and human resource capacity deficit. There is absence of coordination among public organizations undertaking various civic and infrastructure related functions in the city leads to poor urban governance. Lack of adaptive and flexible planning process in response to the economic forces that drive demand for land and land uses further worsens the situation.

Other than this, there is fragmentation of the urban portfolio across ministries at the center. Private vehicles and radio taxies come under the purview of the ministry of road transport and highways while waterways come under the ministry of shipping. Mayor holds largely a ceremonial position while the powers are vested in the municipal commissioner. Also the experience of metropolitan planning committees (MPCs) has been disappointing because of lack of autonomy, executive power, finances and functionaries. Hence, institutional defragmentation can be witnessed whereby multiple agencies often have overlapping roles and are run by the officials who are not accountable to the citizens.

Approach – Way Forward

Good governance is a result of effective learning by the state to cope with challenges and crises it comes across during its evolution. Some of the elements of good governance are – respect for the rule of law, special care for the disadvantaged and weak and tolerance and broad-mindedness which allow people to accept and embrace unity and diversity. The universally accepted features of good governance involves exercise of legitimate political power and formulation and implementation of policies and programmes that are equitable, transparent, non-discriminatory, socially sensitive, participatory and accountable to people.

Realizing that government can neither have a completely minimalistic role nor an entirely proactive one, the Eleventh Plan Document has identified the goal of moving towards faster and more inclusive growth. Some of the instruments used were people’s participation at all stages of planning, implementation and monitoring; democratic decentralization of governance to accelerate the socio-economic development within a participatory framework at the grass-root level; procedural reforms covering all aspects of Government’s interface with public; judicial reform for speeding up the process of delivering justice; using IT for improving efficiency, transparency and making interface with government user friendly etc.

In order to resolve the issues and practice good governance, there is a requirement of coordination and cooperation among all public authorities concerned needs to take place not just in response to a crisis but as a regular and routine feature of the governance set-up. This requires a single coordinating agency. The agency needs to have representatives from other public organizations and domain experts from outside the public sphere which needs to be accountable to citizens for the functions in the region. Necessary checks and accountability mechanisms of public officials must be put in place.

There might be a reform of the 74th constitutional amendment to empower city governments and move to system of a directly elected mayor. A National Urban Finance Corporation of India might be established to fund urban infrastructure projects directly and revitalize the role of the State Finance Commissions to bolster municipal finances. Citizens engagement in cities to drive change across localities should be deepened. Partnership between government, community and NGO can lead to transparency in urban governance. A report card system can be introduced for rating the service dispensing efficiency of public utilities in the cities. A municipal planning committee can be constituted anchored by the elected municipal representatives for formulating city’s metropolitan plan to address the deficiencies in city planning. Strengthening taxation base and other better developed mechanism for devolution of funds for ULBs from state can be considered. Also most importantly there should be a focus on rurban planning which creates growth at micro-level and impedes rural-to urban migration.

Urban India, therefore, needs to network with a great number of people and plan to provide them services, find resources to meet the needs of maintaining and augmenting infrastructure, deal with urbanization and poverty, preserve their environment and retain their competitive edge. This re-engineering is precisely the goal of good urban governance. It envisages improving the quality of life in cities through improved local governance by reinventing a city in inclusive way. Such a city provides space and voice to all its stakeholders through inclusive decision-making, since decision making is the heart of good governance. The strategy for achieving the goals of good urban environment is to advocate the norms and country-specific issues of good urban governance and promote inclusive decision-making process.


India is a large country where about one third of the country is urbanized. However, in future, it is believed that urbanization will increase which is going to have implications on the manner in which cities are governed in the country. With urban population on the increase, the system of urban governance would become increasingly important in days to come.

Urban governance as an issue has assumed critical importance in the context of ever growing role of urban centres in the overall economic growth, employment generation and contribution such centers make to the rational and state wealth. With urban centers growing rapidly, urban governance becomes crucial especially on the impact it has on the life and liberty of the innumerable urban dwellers. With cities becoming centres for large investment, specialized services, amenities and their effective and efficient functioning assumes added importance. If urban centers have been termed as engines of economic growth, urban governance can rightly be called wheels of such engines

Attitudes to urban growth within the country tend to swing between two extremes. Cities are seen either as an unavoidable evil or in a more positive way. The former view is held by those who focus on the growth of slums and squatter colonies, the congestion on the roads and environmental degradation. The other, in contrast, focus on the busy formal and informal sectors in urban areas. From this point of view, the moderate pace of urbanization in the country has been a cause of disappointment. However, there is no rural vs urban conflict either in terms of national growth, or in development properties. Due to the success of rural development programmes along with the limited availability of land for squatting in central urban areas, there seems to be no runaway migration from rural to urban areas. The impact of the growth of population on urban infrastructure and services has mostly been adverse. Cities with high rates of growth would be expected to have more resources for investment in the cities, but the fact is that much of this potential has remained untapped. On the other hand, smaller cities with less economic growth face inadequacies of financial and other resources to cope with increasing demands on services, and this may call for supplemental support from the budget. Hence the existing institutional arrangements may not be adequate to ensure that the cities can cater to the present demand as well as to the future. The institutional arrangements for urban management and the quality of services are closely linked. Strengthening the decentralized urban local body structure to cope with the demand for civic services, is identified as the priority. Active and effective participation of the people in the affairs of the government, national, state or municipal is the basis of democracy. The 74th Constitutional Amendment Act is meant to bring in genuine urban local self- government through decentralization of powers from the state to local level along with transparency, accountability and people’s participation.


  • Avis, W. R. (2016). Urban Governance (Topic Guide). Birmingham, UK: GSDRC, University of Birmingham
  • Datta, A. (1994). Institutional Aspects of Urban Governance in India. Indian Journal of Public Administration40(4), 616–632.

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