HP: CAG Report is a Severe Indictment of Govts on 74th Amendment Implementation

As Shimla elects a new city council, a recent report published by the Comptroller and Auditor General (CAG) of Himachal Pradesh is a severe indictment of successive governments.

This report concerns the “efficacy of implementing the 74th Constitutional Amendment Act 1992”. The 74th amendment, which came into effect in 1993, was a significant departure from the past in the country in the outlook towards the urban centres. It was a continuation of the ‘First Urban Commission’, which was constituted by Rajiv Gandhi, the country's then Prime Minister. This 10-member commission was headed by one of the most profound architect planners in the country, Charles Correa.

The 74th Amendment laid out the roadmap for the empowerment of city governments and emphasised regular elections. Under the 12th Schedule, 18 subjects should be transferred to city governments for their ‘autonomous functioning’. However, many studies in the past decade have revealed that little progress has been made.

Not more than three subjects have been universally transferred to cities. City planning, the foremost function of the city, is nowhere delegated to cities. It remains the domain of the parastatals – the Delhi Development Authority in Delhi, town and country planning departments in most states, and likewise.

Story of Himachal Urban Local Bodies

The CAG report takes the period from April 2015 to March 2020. This report is a 298-page document, which is a scathing exposure of the implementation of the democratic decentralisation process in the hill state.

The executive summary mentions, “Though the state government carried out amendments in the states’ statutes, however, no firm action in terms of empowerment of ULB’s to discharge their functions freely and effectively.”

The notification for the implementation of the Act was done in August 1994. The hard reality is that just five functions have been transferred to urban local bodies. In some of the functions, city governments have no role. Likewise, in four functions, city governments have a limited role.

The term of office of the mayor, deputy mayor, is not co-terminus with the duration of the house. House means the period of the city council. The term of the house and the mayor and deputy mayor was for the same period only once when there were directly elected mayor and deputy mayor elections.

Likewise, another critical area visited by the CAG report is the question of democratic decentralisation, which involves more than just holding regular elections for city governments or providing reservations to women in the city council.

Of course, all that is part of the process, but democratic decentralisation means empowering the people. One of the forms of empowering them is through the process of ward sabhas. This is an essential part of the 74th Amendment. It is also part of the HP Municipal Act. However, in none of the urban local bodies is this being practised. Except once in Shimla, during the period 2012-17, when the city council was run by the directly elected mayor and deputy mayor belonging to the Communist Party of India (Marxist) or CPI(M). However, that did not continue after the 2017 period. The report categorically mentions the absence of ward sabhas and committees.

On Shimla Water Utility and Smart Cities

Notably, the report, which the Chief Minister tabled in the recently concluded Assembly session, goes into great depth while reviewing the smart cities model and the Shimla water utility.

It may be mentioned that the Shimla water utility was created during the CPI(M)-led municipal body subordinated/answerable to the municipal corporation but with a fair amount of autonomy. This utility was called Greater Shimla Water Supply and Sewage Circle. The primary reason for creating this utility was an integrated approach to handling water and sewage in the city and keeping it under democratic control.

Before that, there was a duality in the system. The water was supplied by the state government's Irrigation and Public Health Department (a parastatal), and then it was distributed by the Shimla Municipal Corporation. Likewise, sewage with the municipal bodies was managed by the municipality and treated by the IPH. This duality led to complete mismanagement and the recurrent outbreak of Hepatitis in the city.

The city government in 2015-16 evolved this proposal for a single utility under the municipal corporation. The World Bank also agreed to help GSWSSC with a soft loan to increase bulk water supply and manage the city infrastructure.

However, in 2017, the Bharatiya Janata Party (BJP) won the city government and the state and transformed this utility into a company called the Shimla Jal Nigam Prabandhan Limited (SJNPL) on June 19, 2018. This utility was taken away from the Shimla Municipal Corporation (SMC) and was headed by the chief secretary with a bunch of board of directors.

The CAG report has commented on this transformation. It has said, “The function of ‘Water Supply and Sewage Management’ was stated to be devolved to ULBs. However, it was noticed that:

• The SMC had a 51% share in the company. However, out of the 09 Board of Directors (BoD), the SMC had only three representatives (further reduced to two).

• As per the notification (June 2018) issued by the SMC, SJPNL was to submit quarterly reports about works/steps taken by the Company. However, it was noted that the company is not submitting its status/progress report of working to the SMC.

• Control over MD-cum-CEO of the company had been kept out of the purview of SMC by the BoD.

From the above, it is evident that SMC had limited control over the functioning of SJPNL, thereby defeating the purpose of devolution of functions.”

There are two more essential reports: one by the World Bank, released in December 2022 and another by the Reserve Bank of India. These reports have favoured an empowered city government structure where essential utilities must be under their ambit. However, the inverse is true when it comes to implementation.

Smart City and SPV

There are two smart cities in Himachal Pradesh, designated as part of the flagship programme of the smart city mission by the government of India. These are Shimla and Dharamshala. The CAG report has also reached out to their functioning.

The report stated, “In Himachal Pradesh, two cities viz., Dharamshala and Shimla were selected to be covered under the Mission and two companies (SPVs) were constituted under Company Act 2013 for Smart City Dharamshala and Shimla. However, it was noticed that in Dharamshala Smart City Limited (DSCL), 03 out of 12 members of BoD were from MC Dharamshala, and in Shimla Smart City (SSCL), 02 out of 12 members of BoD were from MC Shimla. Thus, the representation of Municipal Corporations in the BoDs of these two SPVs varied between 25% (DSCL) and 17% (SSCL). However, the stake holding power was 50:50 between State Government and ULB.”

This, in itself, shows the fundamental flaw of the smart city concept. The structure of SPVs robbed city governments and even took away some of their basic functions like maintenance etc. The report highlights, “In this process, some of the devolved functions/works such as upgrading and maintaining roads, streets, Skill Development Centre, underground bins, e-toilets of the Municipal Corporations were being executed by the line departments or other agencies instead of Municipal Corporations. These SPVs were directly accountable to State Government than to ULBs.”

There are some good recommendations that the CAG report has made that go in tune with the spirit of the 74th Amendment.

Some of these are:

· Taking decisive action to translate the vision of decentralisation into reality, besides providing an adequate degree of autonomy to ULBs in respect of functions assigned to them in line with the Constitutional provisions;

· Constituting requisite committees for effective planning and better execution at ULBs’ level;

· Involving greater participation of ULBs in the functioning of various parastatals in the State.

The election to the Shimla Municipal Corporation or the municipalities of Bombay and Bangalore must raise these issues of importance and uphold the spirit of the 74th Amendment.

Though the 74th Amendment needs to be further strengthened, for example, issues of livelihoods, climate change, migration, massive informality that has crept into the urban centres, housing, etc., are not even structured in this amendment, but are the most pressing problems of the day. The linkage of 17 SDGs, 11 directly linked to the city framework, is not even part of the discussion.

These are political issues and must be raised politically for the betterment of our cities and people.

The writer is the former deputy mayor of Shimla, Himachal Pradesh. The views are personal.