Gist of EPW February Week 3, 2023

The Economic and Political Weekly (EPW) is an important source of study material for IAS, especially for the current affairs segment. In this section, we give you the gist of the EPW magazine every week. The important topics covered in the weekly are analysed and explained in a simple language, all from a UPSC perspective.

TABLE OF CONTENTS

1. Municipal Elections and the Indian Constitution
2. Strengthening Municipal Finances
3. Railway Landscape and Urban Marginalisation

1. Municipal Elections and the Indian Constitution

Introduction:

• The Constitution of India provides for a three-tier system of governance, with the Union government, state governments, and local governments. 
• Municipalities are part of the local government system and are responsible for the administration of cities, towns, and other urban areas.
• Municipal elections in India are conducted in accordance with the provisions of the Indian Constitution. 

Delay in Elections:

• Some of India’s largest cities with a population of a little more or less than one crore have gone without a municipal government for several years. 
• For instance, as of January 2023, the city of Bengaluru has been without an elected municipal government for over two years and three months since the term of the last council of the Bruhat Bengaluru Mahanagara Palike (BBMP) came to an end on 10 September 2020.
  • At present, an administrator appointed under the BBMP Act, 2020 is responsible for carrying out the functions of the BBMP.
• No elections took place for the Greater Chennai Municipal Corporation for six years between 2016 and 2022.
• The COVID-19 pandemic, the need to carry out constituency delimitation, and the need to provide Other Backward Classes (OBC) reservations in accordance with the Supreme Court’s ruling on the subject have all been cited by the various governments as the reasons for these delays.

Issues with constitutional provisions:

• Article 243U of the Constitution mandates that the term of a municipality shall be five years and elections shall be held for the municipality before the completion of its term. 
• It is similar to constitutional provisions relating to the conduct of elections relating to the state legislative assemblies, under Article 172. 
• However, when elections are not held for a state assembly, the provisions of Article 356 are triggered which results in a President’s Rule.
  • Article 356 even imposes certain limits on the duration of the President’s Rule. A proclamation imposing President’s Rule expires in two months unless approved by Parliament and even once approved, it lasts for only six months.
• In contrast, no such provision exists for urban local bodies under Part IX-A of the Constitution. 
• An urban local body may be dissolved for any purpose under any law. In the absence of constitutional limitations such as Article 356, such dissolution, therefore, becomes a routine statutory exercise with the state law giving the state government as much power as it wants in the matter. 
• Even though the 74th amendment seeks to give municipal governments the status of constitutional bodies, it leaves their functioning largely up to the mercy of the state governments.
• There has not yet been any decisive court intervention clarifying and limiting the power of the states to replace municipal governments with administrators. 

Significance of effective municipal governments:

• Effective municipal governments play a crucial role in the development and governance of cities and towns in India. 
• As India urbanises and its largest cities grow ever larger, becoming economic hubs and large centres of population, the need for empowered city governments only increases.
• While the day-to-day affairs of the municipal body may be carried out by unelected administrators and committees, the absence of elected councillors creates a democratic deficit in the functioning of these bodies. 
  • Municipal governments are responsible for providing basic services such as water supply, sanitation, waste management, and street lighting. Effective municipal governments ensure that these services are provided efficiently and effectively, improving the quality of life for residents.
• Municipal governments are responsible for the development of infrastructure such as roads, bridges, and public transportation. They play a key role in facilitating economic growth and improving connectivity within cities and towns.
• Municipal governments provide an important platform for citizen engagement and participation. Effective municipal governments can ensure that citizens are involved in decision-making processes and that their feedback and concerns are taken into account.
• They are responsible for disaster management and response. They can ensure that cities and towns are better prepared and respond to natural disasters such as floods and earthquakes.

2. Strengthening Municipal Finances

Context: The Reserve Bank of India (RBI) published its maiden report on municipal finances in November 2022.

State of the government in urban areas: 

• NITI Aayog highlighted that cities in India occupy just 3.0% of the nation’s land, but their contribution to gross domestic product (GDP) is a massive 60.0%. Similarly, analysis of estimated district GDP reveals that each percentage point increase in a district’s urban population share is associated with a 2.7% increase in district GDP.
• Municipal revenues/expenditures in India have stagnated at around 1% of GDP for over a decade. In contrast, municipal revenues/expenditures account for 7.4% of GDP in Brazil and 6% of GDP in South Africa.

                           Image: Share of municipal own revenue to combined revenue

Source: EP&W

Municipal’s own resources

• In the US, municipal governments in 17 states are allowed to levy their own separate income taxes in addition to the national and state income taxes. In India, the successive finance commissions have recommended that local bodies be empowered to mobilise resources through professional tax and entertainment tax. 
  • However, currently, only three states, Kerala, Tamil Nadu and Gujarat, have authorised local governments to impose and collect professional tax. 
• In contrast, some of the more lucrative sources of income, such as octroi, have over the years been taken away from urban local governments. 
• The introduction of goods and services tax (GST) in 2018 has further affected some key sources such as entry tax (octroi), local business tax (LBT), advertisement tax and entertainment tax. 
  • In compliance with the new GST regime, the Municipal Corporation of Greater Mumbai (MCGM) has had to abolish octroi. In the year 2017, when octroi was abolished, octroi was the biggest source of revenue and the civic budget for the fiscal 2016–17 set a target of Rs7,000 crores, almost 35% of its annual total revenue.
• The lack of adequate devolution of power to raise own resources to local governments creates a vertical imbalance.  
  • The share of municipalities in the country’s total tax resources has continued to stagnate at 1.7%, despite a country-wide trend towards improved tax-to-GDP ratio.
• The state finance commissions, which are supposed to devolve funds to local governments are not constituted, and where constituted, their recommendations are largely ignored.
• Programmatic grants from both central and state governments failed to provide incentives to ULBs to leverage commercial resources. 
  • The easy access to programme funds under the JNNURM, and later under AMRUT has resulted in crowding out the municipal bond route. 

Reform measures: 

• The High Powered Expert Committee (HPEC) in 2011 recommended to “insert a ‘Local Bodies Finance List’ (LBFL) along the lines of the Union and State Lists,” in the Constitution. This would empower the ULBs to discharge the larger responsibilities assigned to them. 
• It is essential to improve programme designs that incentivise strong ULBs to mobilise commercial resources. This can be done through better design of performance-linked grants which are linked to results as well as provide incentives for mobilising commercial resources.
• Experience of federal countries such as Brazil should be followed where municipalities receive significant transfers called Municipalities’ Participation Fund, which is 23.5% of the income taxes and industrialised products taxes. 

Strengthening the finance of the ULBs is central to the growth story of India. Adequate financing is essential to enable municipal governments to fulfil their mandate of various services and functions assigned to them. It is also important and critical for attracting good and strong political leadership as well as retaining good administrative functionaries.

3. Railway Landscape and Urban Marginalisation

What is Transit Oriented Development? 

• Transit-Oriented Development (TOD) is an innovative urban paradigm that involves leveraging existing and upcoming public transit infrastructure and associated large numbers of users, to ensure sustainable mobility and optimise utilisation of large through compact mixed-use development.

Image: Benefits of Transit-Oriented Development

Source: tod.org

Components of Transit-Oriented Development

• Walkable design with pedestrians as the highest priority
• Train station as a prominent feature of the town centre
• Public square fronting train station
• A regional node containing a mixture of uses in close proximity (office, residential, retail, civic)
• High-density, walkable district within a 10-minute walk circle surrounding the train station
• Collector support transit systems including streetcar, light rail, buses, etc.
• Designed to include the easy use of bicycles and scooters as daily support transport
• Large ride-in bicycle parking areas within stations
• Bikeshare rental system and bikeway network integrated into stations
• Reduced and managed parking inside a 10-minute walk circle around the town centre/train station
• Specialised retail at stations serving commuters and locals including cafes, grocery, dry cleaners, etc.

Railways and urban India: 

• The Indian Railways has been one of the major sources of transport in India. In fact, it is known as a lifeline of the Indian economy. But, it is suffering from some concerns which reduce the performance of the railways. 
• Railways are seen to be an abode place for many urban people since they have no other place to live and work. This is a common site across all the railway stations in India. 
• Moreover, not only the railway stations but also a proportion of railway properties, especially those falling within urban territories, including the land parcels along the railway tracks, have long served the interests of the poor. 
  • There is a proliferation of slums and squatter settlements along railway tracks and around the stations.
• By 2018, Indian Railways owned nearly 4.77 lakh hectares of land, out of which the operational and allied usages covered approximately 3.66 lakh hectares, 
  • Followed by vacant land, plantation/cultivation, other usages like land given to the Rail Land Development Authority, Container Corporation of India, and 
  • Dedicated Freight Corridor Corporation of India, commercial licensing and encroachments, accounting for 51,550 hectares, 45,650 hectares, 9,830 hectares, 3,910 hectares, and 844 hectares of land. 
  • Slums, squatters and other forms of unauthorised occupancies labelled as encroachments account for nearly 0.20% of the entire land, owned by the railways.

Issues with Transit Oriented Development and poor people: 

• Railway stations offer opportunities to earn money and food for a wide variety of homeless and shanty dwellers, by way of cleaning the station, selling various items to passengers, and rag picking. 
• The majority of Transit Oriented Development (TOD) undertakings are implemented against some social cost through displacing the urban poor from station neighbourhoods and attracting affluent urbanites, who tend to replace residential opportunities for the urban poor.
• The type of employment opportunities that TOD advocates for is not in conformity with the employment structure of poor unauthorised urban workers, living in station neighbourhoods. 
• Railways’ evictions and displacements of encroachers in India, TOD-driven or not, are generally sudden, forceful, vicious, mostly publicised, and negative. In the long run, it may generate a slow affordability crisis.

Any fruitful urban transformation initiative must address the prevailing urban inequities, which require innovative governance. The process of TOD must be backed by proper planning to resettle those who are dependent upon the infrastructure for their socioeconomic development.

Gist of EPW February Week 3, 2023:- Download PDF Here

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