Local Governments and their Functioning

Asha Sarangi and Lipika Ravichandran, Centre for Political Studies, Jawaharlal Nehru University

Relevance of the Practice

Inter-governmental relations at all the three levels (central, state and the local) are important in a federal structure like India, so as to deliver the necessary services and needs to the people of the country as a whole. An integrative functioning of all the three levels is imperative for a successful implementation of any practice or a program that the government formulates. The practices that we have taken for this report section are the rurban mission (rural local governance) and the smart city mission (urban local governance) which has been discussed in detail below. In the case of both, we have tried to analyze how all the three structures (central, state and local governments) are involved efficiently in delivering the necessary infrastructure and service needs of both the rural and urban population.

Moreover, any practice should follow the principle of subsidiary operation in the distribution of functions among three tiers of government under the principle of decentralization, namely: (i) every activity requires a minimum size for functional efficiency and economy; (ii) the area of benefit should not extend beyond the jurisdiction of the panchayat concerned; and (iii) the administrative resources available at that particular level are capable of handling the activity in a competent manner.[1]

Description of the Practice

Shyama Prasad Mukherji Rurban Mission (SPMRM) – Rural Local Government

The vision statement of SPMRM is the ‘development of a cluster of villages that preserve and nurture the essence of rural community life with focus on equity and inclusiveness without compromising with the facilities perceived to be essentially urban in nature, thus creating a cluster of “Rurban villages”’.

The mission outcomes are:

  • bridging the rural urban divide- economic, technological and those related to facilities and services;
  • spreading development in the region;
  • attracting investments in the rural areas;
  • Stimulating local economic development with emphasis on reduction of poverty and unemployment in rural areas.

A ‘rurban cluster’, would be a cluster of geographically contiguous villages with a population of about 25,000 to 50,000 in plain and coastal areas and a population of 5,000 to 15,000 in desert, hilly or tribal areas. As far as practicable, clusters of villages would follow administrative convergence units of gram panchayats and shall be within a single block/tehsil for administrative convenience. Rurban clusters would be developed through the provision of training linked to economic activities, the development of skills and local entrepreneurship and the provision of necessary infrastructure amenities.

The following components are envisaged as desirable components in each cluster:

skill development training linked to economic activities; Agro Processing, Agri Services, Storage and Warehousing; a fully equipped mobile health unit; the upgrading of school/higher education facilities; sanitation; the provision of piped water supply; solid and liquid waste management; village streets and drains; street lights; inter-village road connectivity; public transport; LPG gas connections; digital literacy; Citizen Service Center for the electronic delivery of citizen centric services/egram connectivity; components pertaining to agriculture and allied activities would be required to be given special emphasis while developing these clusters.

In order to achieve the envisaged outcomes, under the National Rurban Mission (NRuM), the state government shall identify the existing Central Sector, Centrally Sponsored and State Government Schemes relevant for the development of the cluster and converge their implementation in an integrated and time-bound manner.

The NRuM institutional framework is hierarchical. The mission envisages the engagement of key stakeholders at the national, state, district and gram sabha level for the success of it. At the national level the institutional framework serves to formulate and facilitate the implementation of the mission. At national level, the mission is monitored by an empowered committee which is assisted by an expert group and a national mission directorate. The state institutional frameworks play a key role in implementing the mission and they are expected to identify rurban clusters. Thereafter, the states are expected to implement and to provide support in the operations and maintenance of rurban clusters. A state nodal agency monitors implementation which is assisted by a state technical support agency and a state project monitoring unit. At the district level, the institutional framework helps in empowering decisions, convergence and coordination of various matters. The district framework involves officers of the concerned line departments and heads of the concerned gram panchayats. At the cluster level, gram sabhas play an active role and they are assisted by rural development professionals.

The implementation of the scheme therefore starts at the central level and ends at the gram sabha level, passing through the state and district level government machineries. The state nodal agency will consult the panchayati raj institutions at the zilla, panchayat samiti and the gram panchayat on the NRuM activities to be undertaken in the clusters. The mission should be adopted by the gram sabhas of all the participating gram panchayats through gram sabha and panchayat samiti resolutions. Panchayat Raj Institution (PRI) members are to be included at all stages of the project cycle from planning, implementation, monitoring, evaluation and maintenance of assets created during the project period. State governments are requested to ensure the participation of local elected representatives comprising members of parliament (MPs), and members of legislative assemblies (MLAs) etc., whenever ‘rurban’ projects are inaugurated/launched.

Smart Cities Mission – Urban Local Government

In 2015, the Government of India (Union Government) launched the Smart Cities Mission. The purpose of the Smart Cities Mission is to drive economic growth and improve the quality of life of people by enabling local area development and harnessing technology, especially technology that leads to smart outcomes. Area-based development will transform existing urban areas (retrofit and redevelop), including slums, into better planned ones, thereby improving livability of the whole city. New areas (greenfield) will be developed around cities in order to accommodate the expanding population in urban areas. The application of smart solutions will enable cities to use technology, information and data to improve infrastructure and services. Comprehensive development in this way will improve quality of life, create employment and enhance incomes for all, especially the poor and the disadvantaged, leading to inclusive cities. The focus of Smart Cities Mission is on sustainable and inclusive development and the idea is to look at compact areas and to create a replicable model which will act like a lighthouse to other aspiring cities. There are now 100 cities under the mission. 

The implementation of the mission at the city level will be done by a Special Purpose Vehicle (SPV) created for the purpose. The bulk of smart city initiatives in India are based on area-based development, i.e. the development of new real estate – a function that is not within the obligatory or discretionary function of a municipal body as per the 12th Schedule. Essentially, the SPV would work as a master developer, entering into arrangements with other developers to develop the site for redevelopment, new development or retrofitting, and thereafter exiting the project, having earned its requisite dividend or expended the amounts for capital works. Being a separate corporate body (typically under the 2013 Companies Act), the SPV can take up processes, works and mechanisms which the municipal body may not be empowered to do in terms of law or its processes, such as being able to raise large amounts of debt, enter into joint venture arrangements, lease, purchase or sell assets – most of which, for municipalities, need separate sanction from the state government.

The SPV will plan, appraise, approve, release funds, implement, manage, operate, monitor and evaluate the smart city development projects. Each smart city will have a SPV which will be headed by a full time chief executive officer (CEO) and have nominees of central government, state government and the urban local body (ULB) on its board. The chief executive officer of this SPV, usually a senior bureaucrat appointed by the state government, has a fixed tenure of three years and cannot be replaced without the authorization of the Government of India. The states/ULBs shall ensure that, (i) a dedicated and substantial revenue stream is made available to the SPV so as to make it self-sustainable and could evolve its own credit worthiness for raising additional resources from the market (equity and debt) and (ii) government contribution for smart cities is used only to create infrastructure that has public benefit outcomes. The execution of projects may be done through joint ventures, subsidiaries, public-private partnership (PPP), turnkey contracts, etc., suitably dovetailed with revenue streams. The SPV will be a limited company at the city-level, in which the state and the ULB will be the promoters having 50:50 equity shareholding. The private sector or financial institutions could be considered for taking equity stake in the SPV, provided the shareholding pattern of 50:50 of the state/union territory (UT) and the ULB is maintained and the state/UT and the ULB together have majority shareholding and control of the SPV. The mission is monitored separately by all the three levels – center, state and city. 

The central government used a competition-based method as a means for selecting cities under the Smart Cities Mission and they receive seed funding from both the central and state governments (50:50). Cities competed at the state level with other cities within the state. Then the state-level winner competed at the national level Smart City Challenge. Cities obtaining the highest marks in a particular round were chosen to be part of the mission. This captures the spirit of ‘competitive and cooperative federalism’.

Assessment of the Practice

The Rurban Mission is a promising one, which aims at providing urban facilities in terms of infrastructure and services to the rural areas and at the same time creates employment opportunities. The Ministry of Rural Development has identified 300 clusters of 20 villages each across India with population ranging from 25,000 to 50,000 through ‘a scientific process of cluster selection which involves an objective analysis at the district, sub-district and village level, of the demography, economy, tourism and pilgrimage significance and transportation corridor impact’.[2] The central government should look into the underlying poor institutional capacities adding to the problem of already burdened and understaffed departments working for the rural and urban issues. It is also important to take into consideration the indigenous knowledge system and work modules towards a sustainable livelihood along with the urban infrastructure and services in the villages.

Coming to the Smart City Mission, this had vowed for technology driven cities in urban areas. The Economic Survey 2019 says that as many as 5,151 projects worth more than Rs 2 lakh crore (approximately €35 billion) are being implemented in 100 cities under the government’s smart city mission. A smart city is defined as an urban area which uses various types of electronic Internet of Things (IoT) sensors to gather data and to support function and resources for operating a city effectively. This mission has benefitted one section of the society and others who are technologically illiterate and do not get benefits from the program and leading at times to polarization of the population, which in turn leads to unequal technology sharing among people and regions of the country. This must catch the attention of the policy-makers so as to make digital literacy an imperative to really benefit from the mission.

References to Scientific and Non-Scientific Publications

Bandyopadhyay D, Ghosh S and Ghosh B, ‘Dependency versus Autonomy: Identity Crisis of India’s Panchayats’ (2003) Economic and Political Weekly 3984

Bird R and Wallich C, ‘Fiscal Decentralization and Intergovernmental Relations in Transition Economics: Toward a Systematic Framework of Analysis’ (working paper no 1122, The World Bank 1993)

Chatterjee S, Kar AK and Gupta MP, ‘Success of IoT in Smart Cities of India: An Empirical Analysis’ (2018) 35 Government Information Quarterly 349

Ministry of Rural Development, ‘Frequently Asked Questions’ (Shyama Prasad Mukherji Rurban Mission (SPMRM), 25 February 2020) <https://rurban.gov.in/index.php/Public_home/faq>

Rao MG, ‘Fiscal Decentralization in Indian Federalism’ in Ehtisham Ahmad and Vito Tanzi (eds), Managing Fiscal Decentralization (Routledge 2002)

Saxena R, Situating Federalism: Mechanisms of Intergovernmental Relations in Canada and India (Manohar Publishers 2006)

—— ‘Intergovernmental Relations in India’ in Meghna Sabharwal and Evan M Berman (eds), Public Administration in South Asia (Routledge 2017)

Singhal M, ‘State Government and Local Administration: From Control to Co-operation’ (1970) Economic and Political Weekly 1098

Stein M and Turkewitsch L, ‘Similarities and Differences in Patterns of Intergovernmental Relations in Parliamentary and Presidential Federations: A Comparative Analysis’ (International Political Science Association (IPSA) 21st World Congress of Political Science, Santiago, July 2009) Vaddiraju AK, Federalism and Local Government in India (Studium Press (India) Pvt. Limited 2017)

[1] ‘Decentralisation in India. Challenges  &  Opportunities’ (Discussion Paper Series 1, United Nations Development Programme) <https://www.undp.org/content/dam/india/docs/decentralisation_india_challenges_opportunities.pdf>.

[2] Press Information Bureau, ‘Union Cabinet Approves Shyama Prasad Mukherji Rurban Mission to Drive Economic, Social and Infrastructure Development in Rural Areas’ (Government of India Cabinet, 16 September 2015).