Model Answer
0 min readIntroduction
The 73rd and 74th Constitutional Amendments, enacted in 1992 and 1993 respectively, marked a watershed moment in India’s decentralization journey. These amendments aimed to institutionalize Panchayati Raj Institutions (PRIs) and Urban Local Bodies (ULBs), thereby bringing governance closer to the people. While primarily focused on political decentralization, these amendments also had significant economic implications, devolving financial powers and responsibilities to the local level. This shift was intended to promote participatory planning, efficient resource allocation, and inclusive growth, though implementation has faced numerous challenges.
73rd Constitutional Amendment (Panchayati Raj) – Economic Features
The 73rd Amendment added Part IX to the Constitution, titled “The Panchayats,” and Article 243G, which mandates state legislatures to endow Panchayats with powers and authority to function as units of self-government. The economic features are:
- Functions devolved: Article 243G lists 29 subjects that can be devolved to Panchayats for planning and implementation. These include agriculture, land improvement, irrigation, water management, wasteland development, social forestry, minor irrigation, animal husbandry, fisheries, poverty alleviation, and rural housing.
- Sources of Funds: The amendment envisioned Panchayats to have access to various sources of funding:
- State Finance Commission (SFC) Grants: Article 243I mandates the establishment of SFCs every five years to recommend principles governing the distribution of taxes, duties, tolls, and fees between the state and Panchayats.
- State Government Grants: Direct grants from the state government based on population, area, and other relevant factors.
- Own Funds: Panchayats can generate revenue through local taxes (property tax, profession tax, etc.), user charges, and fees for services provided.
- Central Government Schemes: Funds allocated through various centrally sponsored schemes implemented by PRIs.
- Planning & Implementation: The amendment emphasizes the role of Panchayats in preparing plans for economic development and social justice, as laid down in the Eleventh Schedule.
74th Constitutional Amendment (Municipalities) – Economic Features
The 74th Amendment added Part IXA to the Constitution, titled “The Municipalities,” and Article 243W, which mandates state legislatures to endow Municipalities with powers and authority to function as units of self-government. The economic features are:
- Functions devolved: Article 243W lists 18 functions that can be devolved to Municipalities. These include urban planning, regulation of land-use, roads and bridges, water supply, public health, sanitation, solid waste management, slum improvement, and urban forestry.
- Sources of Funds: Similar to Panchayats, Municipalities are expected to have access to:
- State Finance Commission (SFC) Grants: Article 243Y mandates the establishment of SFCs every five years to recommend principles governing the distribution of taxes, duties, tolls, and fees between the state and Municipalities.
- State Government Grants: Direct grants from the state government.
- Own Funds: Property tax, water tax, entertainment tax, and fees for municipal services.
- Central Government Schemes: Funds allocated through centrally sponsored schemes for urban development.
- Planning & Implementation: The amendment emphasizes the role of Municipalities in preparing plans for economic development and social justice, as laid down in the Twelfth Schedule.
Comparison of Economic Features
| Feature | 73rd Amendment (Panchayats) | 74th Amendment (Municipalities) |
|---|---|---|
| Focus Area | Rural Development | Urban Development |
| Functions Devolved | 29 subjects (agriculture, irrigation, poverty alleviation, etc.) | 18 functions (urban planning, water supply, sanitation, etc.) |
| Funding Sources | SFC grants, State grants, Own funds (local taxes), Central schemes | SFC grants, State grants, Own funds (property tax, water tax), Central schemes |
| Planning Emphasis | Economic development and social justice in rural areas | Economic development and social justice in urban areas |
Challenges in Implementation
Despite the constitutional provisions, the economic empowerment of PRIs and ULBs has been hampered by several challenges:
- Inadequate Devolution of Funds: States have often been reluctant to fully devolve funds to local bodies, leading to financial dependence on state governments.
- Weak SFCs: SFCs have often lacked the necessary expertise and independence to make effective recommendations.
- Limited Revenue-Raising Powers: Local bodies often have limited powers to raise their own revenue, making them vulnerable to financial constraints.
- Capacity Constraints: Lack of trained personnel and administrative capacity at the local level hinders effective planning and implementation.
- Political Interference: Political interference in the functioning of local bodies can undermine their autonomy and effectiveness.
Conclusion
The 73rd and 74th Constitutional Amendments were landmark steps towards democratic decentralization and economic empowerment of local bodies. While they provided a constitutional framework for devolving financial powers and responsibilities, their effective implementation has been uneven. Addressing the challenges related to inadequate funding, weak SFCs, limited revenue-raising powers, and capacity constraints is crucial to realize the full potential of these amendments and achieve truly inclusive and sustainable development at the grassroots level. Strengthening the financial autonomy of PRIs and ULBs remains a critical priority for India’s development trajectory.
Answer Length
This is a comprehensive model answer for learning purposes and may exceed the word limit. In the exam, always adhere to the prescribed word count.