Federalism
Bridging the Local: Beyond the 73rd
and 74th Amendments
MUKTA NAIK, SAMA KHAN AND SHAMINDRA NATH ROY 1
Cities are seen as the key drivers of growth and
managing urban expansion is a major policy
challenge. But Indian urbanization is marked not
just by expansion but also by the transformation of a
large pool of rural areas. Together, these two factors
contributed about 40% of urban population growth
between the 2001 and 2011 censuses, with an equal
contribution coming from natural growth, and the rest
from migration. India’s urbanization is thus as much a
story of its large megacities as it is a story of the in situ
transformation of its rural population, not just in the
periphery of cities but also beyond.
Indian Urbanization on the Ground:
A Rurban Story?
In India, very large cities coexist with a dense network
of small towns. The six major urban agglomerations
– Delhi, Mumbai, Kolkata, Bengaluru, Hyderabad and
Chennai – had about 74 million inhabitants in 2011.
They are followed by a series of secondary metropolitan
areas – state capitals and other big cities; all these
million-plus cities accounted for a little under a third
(31%) of the urban population in 2011. Some are recent
upstarts like Gurugram, but most have been around for
some time, as medieval or colonial cities.
While the large cities are commonly regarded as
growth engines, urban growth in the past decade is
not concentrated in these but is actually quite evenly
distributed across various urban categories and
locations. One-third of the fastest growing cities are
small towns – 40% of the urban population in 2011 lived
in small towns of less than 100,000 – and their economic
activities are confined to the development of specialized
clusters involving cities of various sizes as well as villages.
111
Federalism
Not all these towns are administratively ‘urban’ or
statutory towns (STs), but they are counted as urban by
the Census since they are above the demographic and
economic threshold of being ‘urban’. These settlements
are known as census towns (CTs). Together with
smaller STs, they bridge the gap between India’s large
cities and rural areas as nodes that supply essential
goods and services to the hinterland.
While the CTs are administrative villages that are
counted as urban, there are many villages that do
not cross the Census threshold but show visible nonagricultural functions. Together, these new ‘rurban’
spaces are slowly becoming a vital part of India’s
settlement hierarchies, and their importance is rising in
terms of filling the spaces between the interconnected
city systems. They provide two main kinds of crucial
linkages: between rural and urban, spatial and economic.
Spatial Periphery: While the peripheries of large
cities like Delhi, Mumbai or Kolkata are growing at a
faster rate than the core cities, growth of population
and construction is occurring around smaller cities
as well, and across different geographical locations.
For example, Mallappuram, which used to be a small
municipality of 10,000 people in northern Kerala
during Census 2001, grew to an urban agglomeration of
1.7 million people by 2011. This growth came from CTs
– administered by panchayats – around the city, which
constituted 80% of the population of the Mallappuram
urban agglomeration in 2011.
Spatial Corridor: Rurban areas are also emerging
along industrial corridors, combining cities of different
sizes and villages between two distinct city clusters
to create an extended urban region. For example,
many such settlements connected to textiles and light
manufacturing stretch along NH 45, from Bengaluru to
Salem in southern India. Such spaces blur the interurban boundaries while facilitating integration of the
rural with the urban.
Economic Aspects: Economically, non-agricultural
activities are spatially diffused, much of it outside the
larger cities. In 2005, the share of the districts where the
112
Bridging the Local: Beyond the 73rd and 74th Amendments
largest 50 metropolitan areas are located was only 41%
of the total non-farm value added in the country. As
per the latest Periodic Labour Force Survey (PLFS), 201718, about 45.8% of the manufacturing employment in
India is rural. In these rurban areas, economic activities
are not just non-farm but also agricultural, with
returns from farms and remittances being invested
in services like transport and retail trade. Even in
large cities, stringent land use regulations and urban
density policies can push firms beyond the formal city
boundaries. The pace of manufacturing employment
growth was fastest (41%) over 1998-2005 in rural areas
adjacent to the largest metropolitan cities.
In India, therefore, it may be more accurate to
characterize this phenomenon as a rural-urban
gradation, not just in terms of economic indicators
like non-farm activities but also in terms of other
measures like built-up growth or night-light intensity.
These places are also not very different from smaller
towns in terms of consumption levels or investment
in private assets like septic tanks or motorized twowheelers. Neatly classifying such settlements as urban
or rural biases our understanding of India’s structural
transformation and its associated welfare outcomes.
Dichotomous Governance
Yet, our administrative structure valiantly attempts to
govern India’s settlements across clear administrative
boundaries of rural and urban. The Constitutional
framework of rural and urban governance, introduced
by the 73rd and 74th Constitutional Amendments
– gram panchayats in the case of villages and
municipalities in the case of urban areas – reflects this
dichotomy. This is historically evident at both state/
local and union government levels. Only the STs are
administrative urban areas, and are governed by an
elected urban local body (ULB) constituted by Article
243 P & Q of the Constitution, which varies across
different sizes and scales; they include municipal
corporations, municipalities or municipal councils,
and nagar panchayats or ‘transitional urban areas’. The
criteria to designate (or declassify) a place as a ULB and
categorize them across different scales are a prerogative
Federalism
of the state governments. These criteria vary across
states, from population cut-offs to workforce character,
revenue generation capacity, etc. What is recognized as
a ULB in one state may not be so in another.
CTs and villages, which constitute the rural-urban
gradation, are not designated as administratively
urban by the state, and continue to be governed by the
appropriate gram panchayat. However, socioeconomic
changes in these rapidly transforming spaces make
them appear quite similar to formal urban areas in
terms of economic activities, human capital and the
nature of services required by the citizens.
This administrative classification also results in
differences in functional domains and financial
incentives of the rurban areas and smaller STs. The
11th Schedule of the Constitution places important
functions like agriculture, irrigation and housing under
the ambit of panchayats, while the 12th Schedule
places urban planning, land use, water supply, roads,
bridges, health sanitation and slum improvement
under the purview of municipalities. But the states are
not obliged to transfer these functions to local bodies,
and there is variation across states as to the extent of
transfer. These functionally distinct structures for rural
and urban mean that a panchayat may not be able to
pursue policies that respond to the changes happening
in its jurisdiction.
At the Union government level, where the focus is more
on financial incentives and grants for development,
there is historically a sharp differentiation between
rural and urban, where Union schemes have given
preference to rural over urban in centrally sponsored
schemes (CSSs). For instance, the estimated allocation
for Swachh Bharat Mission-Grameen (SBM-G) is Rs
134,386 crore, which is about seven times the support
for the urban counterpart, SBM-U. As a result, many
states prefer rurbanizing places like CTs to remain rural,
rather than classifying them as urban, to benefit from
the larger budget for rural development. Indeed, in
2004, Tamil Nadu switched the classification of over
500 urban areas to rural, to obtain more funds from the
central government.
The Dissonances
Gap in services: Differences in governance across
the formal urban (ULBs) and rurban settlements is
responsible for the gap in public services like piped
sewerage or in-house water connections across them,
despite a private demand for these services. Although
these rurban spaces – that is, the CTs and large villages
– are very different in economic structure, built-up area
and services from other rural settlements, they are
not capacitated to meet their changing requirements
of services such as drainage, septage management or
street lighting. This is because all of them are governed
by the same rural governance structure. Even within the
urban periphery, public service provisions like piped
sewer falls off sharply once the formal administrative
boundary of the core city is crossed. In most cities, it is
lower in all settlements around the core city, and drops
markedly with increasing distance from the core city.
Resistance to reclassification: One consequence of
this ‘denied urbanization’ is that citizens resist state
government proposals to reclassify their areas as ULBs.
While there is regional variation, several services,
especially sanitation, are individualized due to poor
provision of sewerage network, piped water facilities,
etc. However, Article 243 X of the Constitution permits
the ULBs to collect taxes and duties, as authorized by
the state legislature. Hence, the absence of property
taxes and higher subsidies in rural areas can drive
strong local interest to retain the rural-urban binaries,
as people are often reluctant to pay extra for the
services that they have already self-provided. The
inadequate provision of public services in smaller
towns adds strength to this preference.
Resistance to integration: Concomitantly, in large
metropolitan areas where public services may be
the responsibility of parastatal agencies (such as
metro water boards), people prefer to be in smaller
municipalities rather than become part of an expanded
core city. For example, 18 new municipalities were
created around Hyderabad in August 2018 to regulate
land development in the city’s peripheries. In the
course of this process, the elected representatives of
Policy Challenges 2019-2024: Centre for Policy Research
113
Federalism
the erstwhile gram panchayats negotiated with the
government to make the areas separate ULBs instead
of merging with Hyderabad, as they feared taxes may
be higher in the latter case.
Employment: These unequal service provisions
across the rural-urban spectrum affect the economic
transformation of rurban areas. While some specific
labour-intensive manufacturing industries are
moving out of the municipal boundary, growth
restrictions prevent significant employment growth
in such districts. In some of these districts, there are
concentrated clusters of well-developed household
industries, such as the carpet and handloom clusters
of Uttar Pradesh or bidi clusters of West Bengal. These,
if integrated with the wider economic geography, can
enhance the growth machine and provide substantial
local employment.
Transport: This is another issue that falls between
two stools. The movement of labour and the spatial
distribution of jobs in urban peripheries are linked
to the availability of multimodal and intermediate
public transport like three wheelers, but there is
no clear functional domain in the rural governance
framework to regulate this. As a result, despite having
a low cost of operation, these modes are pushed to
the fringes rather than becoming an integral part of
the public transit system, making it harder for labour
to access employment.
Over time, these limitations can have repercussions
on the future growth of CTs and bigger villages, where
large sections of the workforce are only precariously
engaged in non-farm jobs as small entrepreneurs
or casual workers. Even where necessary factors
to provide a more solid non-farm transformation
are present, the prevailing functional and fiscal
domains can prove to be a bottleneck for such growth.
Overcoming these dichotomies could result in
significant employment growth.
114
Bridging the Local -- Beyond the 73rd and 74th Amendment
Policy Recommendations
The onus of prevailing over these rural-urban binaries
in the governance framework and integrating a variety
of interlinked rural-urban functions is on both the
Union and federal levels of government.
State: At the state level, the effort should be to make
the functional domain flexible in case of rurban spaces.
Even within the prevailing framework of the 11th and
12th schedules, it is possible to make such provisions.
For example, the 12th Schedule does not make any
distinction between the categories of urban areas like
municipal corporations, municipal councils and nagar
panchayats in devolving urban management functions.
The language of the Act does not restrict the states
from devolving functions from the 11th Schedule to
ULBs or from the 12th Schedule to panchayats. Using
this flexibility, states can transfer certain functions –
such as permitting building licenses, sub-divisioning
and readjusting land for variable uses, or regulating
permits and lay-out routes for transport modes such as
e-rickshaws – to the rurban areas.
The size-insensitive character of the urban governance
framework can also be used to functionally empower
smaller ULBs or panchayats to provide ‘urban’ services
so that citizens in CTs and other rurban spaces get the
desired levels of services and incur an obligation to
pay, where appropriate. However, these devolutions
should be made keeping local capacities and political
environments in mind.
More coordination in land use and key infrastructure
across the rural-urban gradation is necessary, especially
in transport, water treatment plants, solid waste
management, etc. As most rurban development,
especially in the periphery and along corridors, usually
follows the trunk routes of transport infrastructure,
urban planning needs to occur simultaneously with
the expansion of transport networks. The use of spatial
data over time can help with this.
Federalism
There is also a role for mechanisms (some defunct in
many states ) like the District Planning Committee
(DPC) and Metropolitan Planning Committee (MPC)
to institutionally coordinate between rural and
urban local governments. These or similar structures
can also enable states to blend funding from various
sources to address the needs of rurban spaces.
Union: At the Union level, there is an urgent need
to break out of the hardcoded definition of rural
and urban. There is wisdom in being cautious about
absolute conversions of CTs into STs. Given the
variety of circumstances under which CTs are formed,
states would need to deploy a case-specific approach
to leverage their urban characteristics.
Designs for central schemes must not impose
restrictions by typology of location because services
in rurban areas need a fit-for-purpose approach. For
example, SBM-G focuses on constructing twin-pit
latrines on a priority basis in rural areas, but many
rurban spaces (where the use of septic tanks was
already high at the start of the scheme) would
have been served better by efficient septage and
faecal waste treatment management. Therefore,
hard coding of central scheme interventions by
specifying technologies for urban and rural spaces
should be avoided.
At the implementation level, states must have the
flexibility to evolve modus vivenda to address rurban
needs. For example, given how mobile labour is,
states should be able to use funds from the National
Urban Livelihoods Mission (NULM) in a variety
of locations, including peripheries and corridors.
Similarly, although the affordable housing scheme
Pradhan Mantri Awas Yojana (PMAY) avoids some of
the pitfalls of hard coding by supporting state- and
region-centric variations in materials and technology,
PMAY-Urban – rather than PMAY-Rural – may be
more suited for peripheral villages.
Disassociating schemes from their location is
hobbled by the existence of separate ministries for
rural and urban development, but schemes like SBM
that do not come under these ministries can choose
to function outside of this binary. For example, the
central scheme for working women’s hostels has
transcended this binary; since its inception in 1972-73,
it has been catering to urban, rural and even semiurban areas where employment opportunities exist
for women under the umbrella of the Ministry of
Women and Child Development.
Another approach is to allocate funds from different
schemes to fill the gap in key infrastructure and
bridge the service vacuum between rural and urban.
The Shyama Prasad Mukherji Rurban Mission
(SPMRM) is a step in this direction, but its location
within the Ministry of Rural Development limits its
ability to aid ‘urban’ spaces.
Conclusion
With cities and their associated economic engines
beginning to be viewed as connected to their
peripheries and as part of a wider city system
throughout South and South East Asia (rather than
in isolation), this is a good moment for the new
government to introduce an integrated approach to
urbanization, bridging the artificial divides of the 11th
and 12th schedules. It is time to build mechanisms
that can facilitate inter-ministerial interlinkages. It
might even be prudent to imagine a single ministry of
local governance in the long run. For now, a categoryagnostic approach to central government schemes
and an architecture that allows states to respond
flexibly would enable India to leverage the latent
opportunity in rurban spaces.
Policy Challenges 2019-2024: Centre for Policy Research
115
Federalism
REFERENCES
Centre for Policy Research. (2016). Integrating intermediate public transport within transport regulation in a megacity:
A Kolkata case study. Working Paper.
Chatterjee, P. (2011). Democracy and economic transformation in India. In Understanding India’s New Political
Economy (pp. 33-50). Routledge.
Chatterjee, U., Murgai, R., & Rama, M. (2015). Employment Outcomes along the Rural-Urban Gradation. Economic and
Political Weekly, 50(26), 5-10.
Denis, E., Mukhopadhyay, P., & Zérah, M. H. (2012). Subaltern urbanisation in India. Economic and political weekly,
47(30), 52-62.
Desmet, K., Ghani, E., O’Connell, S., & RossiHansberg, E. (2015). The spatial development of India. Journal of Regional
Science, 55(1), 10-30.
Joshi, B., & Pradhan, K. C. (2018). Officiating Urbanisation. Working Paper. Centre for Policy Research.
Mehta, L., & Karpouzoglou, T. (2015). Limits of policy and planning in peri-urban waterscapes: the case of Ghaziabad,
Delhi, India. Habitat International, 48, 159-168.
Mukhopadhyay, P. (2017). Does Administrative Status Matter for Small Towns in India? In Subaltern urbanisation in
India (pp. 443-469). Springer, New Delhi.
Mukhopadhyay, P., Zerah, M. H., Samanta, G., & Maria, A. (2016). Understanding India’s urban frontier: what is behind
the emergence of census towns in India? The World Bank.
Nandi, Sangeeta and Shama Gamkhar (2013): “Urban Challenges in India: A Review of Recent Policy Measures,” Habitat
International, Vol 39, July, pp 55–61
PIB (2016): “States Asked to Convert 3,784 Urban Areas into Statutory Urban Local Bodies,” Press Information Bureau,
Ministry of Housing and Urban Affairs, Government of India.
Pradhan, K. C. (2013). Unacknowledged urbanisation: New census towns of India. Economic and Political Weekly, 43-51.
Randhawa, P., & Marshall, F. (2014). Policy transformations and translations: lessons for sustainable water
management in peri-urban Delhi, India. Environment and Planning C: Government and Policy, 32(1), 93-107.
Ruet, Joel and Stéphanie Tawa Lama-Rewal (eds) (2009): Governing India’s Metropolises, New Delhi: Routledge India.
Samanta, Gopa. "The politics of classification and the complexity of governance in census towns." Economic and
Political Weekly 49.22 (2014): 55-62.
Shaw, A. (Ed.). (2007). Indian cities in transition. Orient BlackSwan.
Sivaramakrishnan, K. C. (2013). Revisiting the 74th Constitutional Amendment for better metropolitan governance.
Economic and Political Weekly, 86-94.
Sivaramakrishnan, K. C., Kundu, A., & Singh, B. N. (2005). Handbook of urbanization in India: an analysis of trends and
processes. Oxford University Press, USA.
Sivaramakrishnan, K.C. (2002). Turning urban, staying rural. The Hindu. Accessed from https://www.thehindu.com/
todays-paper/tp-national/tp-tamilnadu/turning-urban-staying-rural/article27833464.ece, at 26/06/2019.
Swerts, E., Denis, E., & Mukhopadhyay, P. (2018). Diffuse Urbanization and Mega-Urban Regions in India: Between
Reluctant and Restrictive Urbanism? In International and Transnational Perspectives on Urban Systems (pp. 237-262).
Springer, Singapore.
Vishwanath, T., Lall, S. V., Dowall, D., Lozano-Gracia, N., Sharma, S., & Wang, H. G. (2013). Urbanization beyond
municipal boundaries: nurturing metropolitan economies and connecting peri-urban areas in India (No. 75734).
116
Bridging the Local -- Beyond the 73rd and 74th Amendment
Federalism
END NOTES
1.
The authors gratefully acknowledge the inputs of Kanhu Charan Pradhan while writing this piece.
2.
Only if the core city is taken into account, not the entire urban agglomeration.
3.
A census town is a settlement which has a population of 5000 or more, a population density of more than 400 persons/sq.km, and a male
main workforce participation of 75% or more. All STs, which constitute an urban local body (ULB), are automatically defined as urban.
Unlike India, many countries rely only on a population size to distinguish between rural and urban areas. If only population size was used
to identify census towns in India, and villages with more than 5,000 inhabitants were considered urban, the share of the urban population
would increase by about 15 percentage points.
4.
For example, the growth rate of the core city in the Mumbai metropolitan region is 0.4% while the periphery grew at 3.6%, within 2001-11.
5.
NSS 2011-12 consumer expenditure data reveals that a small town consumer spends about 70% of a consumer in million-plus cities.
However, their spending pattern is very similar to large cities, with similar amounts being spent on items like conveyance, rent or consumer
durables, as in million-plus cities. The share of households which owns a motorized two-wheeler is 28% in these rurban areas, and 27.8% in
smaller STs, which has a population of less than 50,000. The share of households with septic tank is 58.8% in rurban areas, while it is 55.7%
in smaller towns.
6.
The share of households with in-house access to water is 35% in villages, 59% in rurban areas (CTs and large villages) and 62% in smaller
STs, which have less than a hundred thousand population.
7.
For example, the share of households connected to the piped sewerage network is 86% in the municipal area of Hyderabad, but drops to
50% in the other ULBs and 27% in the all the CTs in the Hyderabad metropolitan (HMDA) area. The share of villages with piped sewer in
HMDA is 7%. Interestingly, the outgrowths of HMDA, which are also rural but are contiguous to the core city, have a higher share of piped
sewer coverage at 52%.
8.
The interests of the state governments to reclassify the CTs or other forms of rurban spaces into ULBs also varies by the shifting growth
trajectories across states. While states like Gujarat reclassified 24 CTs to STs within 2001-11, UP chose to not reclassify any of them into
formally urban categories.
9.
There are a lot of self-provisions of public services like roads, piped connection of water to households in some of the richer peri-urban
neighbourhoods of larger cities (Randhawa et al, 2014; Mehta et al, 2015).
10. Accessed from https://timesofindia.indiatimes.com/city/hyderabad/59-new-municipalities-from-august-1-to-boost-suburbs-infra/
articleshow/64970632.cms, at 24th April, 2019.
11.
The Kolkata city is dominated by yellow taxis and auto-rickshaws, while the periphery is served by a variety of different modes of IPT
services like the batter operated e-rickshaws, and diesel-fuelled vehicles like Tata Magic and Piaggio Ape. A lack of regulations at the RTA,
police and local levels lead to contestations across there different kinds of services, which leads to operational issues and easy movement in
the peripheries, instead of facilitating the services (CPR, 2016).
12.
An analysis of the 6th Economic Census (2012-13) data shows only about 20% of the CT population resides in such kind of settlements
where the share of manufacturing to total workforce is more than 50%.
13.
The ambiguous part of the act has usually led to different responses from the state governments so far. There has been persistent resistance
from the state governments to implement the provisions of the act in totality, and issues like water and sanitation management remains
the prerogative of parastatal agencies under the control of state governments for a majority of cities. Very few financial and human
resources functions have been transferred to municipalities and ULBs remain weak highlighting the unwillingness of the state to relinquish
its control over the urban (Nandi and Gamkhar 2013, Ruet and Tawa Lama-Rewal 2009).
14.
While MPCs have rarely been set up in most states, they have been only involved into mere consultations while dealing with issues, rather
than any active involvement in planning functions (Sivaramakrishnan, 2013).
15.
During May 2016, the erstwhile Ministry of Urban Development came out with a notification that asked all the 28 states to take ‘immediate
and necessary action’ to convert all the census towns (CTs) into statutory urban local bodies (STs) to promote planned development.
16.
An ongoing CPR analysis of the PMAY-U data shows that approximately eighty villages have been included in the projects enlisted under
PMAY-Urban, most of which are neighboring larger Urban local bodies.
Policy Challenges 2019-2024: Centre for Policy Research
117