How to Reform Our Cities

Rapid urbanization has led to most of the country’s productive activity being concentrated in metropolitan regions. For example, the Mumbai Metropolitan Region (MMR) contributes approximately  6 % of the national GDP. Despite its economic significance to the state and country, MMR is not without its problems in terms of the lack of affordable housing, rapid increase in the number of people residing in slums, sanitation and drainage and transport issues.  Some of these issues can be attributed to the current structure and form of local governance, mandated in India by the 74th Amendment to the Constitution. A potential remedy could be in the form of a metropolitan wide government with an empowered mayor that oversees the entire region.

The MMR constitutes of nine municipal corporations and 16 municipal councils, and falls under the category of “Uncoordinated Single-Tier iGovernance,” which contains several independent local jurisdictions that deliver services with little or no coordination. Problem one: In order to achieve efficient delivery of public goods and services, local bodies need a robust mechanism to raise revenues. At the moment, they have a limited set of local taxes, and much of their funds comes from the center or state in the form of devolved conditional grants. Problem two: the structure of governance itself limits the functional area of urban local bodies (ULBs). For example, constant rallies and cries over how municipal corporations have not invested in relevant infrastructure have become commonplace. Moreover, the lopsided structure implies that there is often no single person left accountable, leaving urban actors open to routinely passing the buck.

How can we address this? A switch from “Uncoordinated Single-Tier Governance” to “Horizontally Coordinated Mandatory Two-Tier Governance” is required. This would see two tiers come to the fore, where the upper (headed by the mayor) and lower tiers have well-defined independent responsibilities. Currently, the position of mayor that is being occupied among municipal corporations in India is ceremonial in nature, and does not wield much power. (Instead, power is vested with the municipal commissioner). Under this two-tier structure, the municipal commissioner retains his position along with the presidents elected among the municipal councils in the lower tier.

An empowered mayor will bring about internal efficiency and, more importantly, bring about administrative efficiency. As a result of the numerous councils and corporations that operate within a metropolitan region, along with the state parastatals assigned to carry out certain tasks, coordination failure has become the norm, leading to the postponement of most projects. This new structure of governance will bring in accountability as well as more responsibility toward voters. However, the switch will not come easy: the key challenge of building state capacity to govern at the local level remains. One argument is that elected representatives will now face competition from individuals, leading to better understanding of the functions of cities, and over time, the knowledge of how to manage cities.

To see how an empowered mayor might work, let us take the example of The Mumbai Trans Harbor Link (MTHL) project. MTHL was originally to be undertaken by Maharashtra State Road Development Council (MSRDC) — a state parastatal. Thus, project oversight would fall to the state government and its associated departments. However, if such a project was governed at the metropolitan level, we could have observed the benefits of the principle of subsidiarity. Delays in the project have occurred as a result of the project being planned by the MRDC and Mumbai Metropolitan Region Development Authority (MMRDA). The state government is therefore far too removed to coordinate effectively whereas since the project spans multiple jurisdictions. A single ULB would also have failed in terms of coordination. This would ideally be suited to be undertaken by a metropolitan wide government with an empowered mayor acting as the executive.

Devolution of functions is one thing, whereas finances is an entirely different challenge in this framework. There is a need for empowering local bodies to collect more own revenues in order to meet local development goals. However, such revenue-raising capacities are susceptible to capture by elected representatives. The BMC (one of the richest municipal corporation in India with an annual budget of Rs. 27,258 crores) may oppose the new structure as it opens up opportunities for rent seeking, potentially causing severe friction among the political players, with the introduction of a governmental structure that oversees their activities. Implementation of such a structure also requires tremendous political will of the State government, who will need to act against their own interests to devolve more power to the metropolitan level.

Given the shift in responsibilities and power from one level to another, there is also the risk of simply shifting the locus of corruption down the line. Take the case of Bogota, where a change in the political framework lead to significant urban transformation. Prior to reform, the city was experiencing rapid population growth, violent crimes, was heavily in debt and had limited resources at its disposal. The city then established a financial and political framework that empowered mayors, which lead to increases in efficiency internally and administratively. Is there a lesson to be learnt there?

(This was first published on Pragati on 5 September, 2018:

Nikhil George