Municipal Finance – Functionaries

By Vishnu Prasad, IFMR Finance Foundation

Following the posts on Functions of ULBs and Municipal Funds, this post provides an overview of functionaries at ULBs, explains why the poor urban service delivery mechanism is rooted in weak staff capacity and disjointed institutional set-up and concludes with recommendations for strengthening capacity building.

Overview of Functionaries

Urban Local Bodies (ULBs) in most states of India fall within the purview of the Department of Urban Affairs or Department of Urban Development. In this post, we take the example of Karnataka to illustrate the executive set-up of ULBs. Of all ULBs in Karnataka, only the city corporation of Bangalore, Bruhat Bangalore Mahanagara Palike (BBMP) functions directly under the Urban Development Department (UDD). All other ULBs function under three wings of the Department: Municipal Administration, Town Planning and Urban Land Transport. Each wing is headed by a Director. In addition, many boards and authorities with specific responsibilities also function under the department. For example, the Karnataka Urban Water Supply and Sewerage Board, Karnataka Urban Infrastructure Development and Finance Corporation, Bangalore Metro Rail Corporation etc. fall under the purview of UDD.

The ULB councils consist of Corporators (City Corporation) or Councillors (Other ULBs), who are directly elected by the people. The elected corporators or councillors elect a Mayor or President, who presides over the meetings of the council. In addition, ULBs have Standing Committees to deal exclusively with functions like taxation, finance and appeals; public health, education and social justice; town planning and improvement and accounts etc.

The Commissioner or Chief Officer is the executive head of the ULB. Figures 1 and 2 below illustrate the executive set-up of city corporations and ULBs.

Dismal state of urban service delivery

As previous posts in this series have pointed out, municipal bodies in India are characterized by a high level of under-spending. India needs to make substantial investments on urban infrastructure in order to bridge the current gap in service delivery (Rs. 39.2 lakh crores over the next 20 years according to The Report on Indian Urban Infrastructure and Services (2011)). However, this forms only a partial explanation of the dismal state of urban service delivery.

Weak staff capacity of ULBs limits the ability of ULBs to discharge functions mentioned in the 74th Constitution Amendment Act (CAA). Jawaharlal Nehru National Urban Renewal Mission (JNNURM) has exposed the lack of capacity at the local government level to prepare and implement projects (like preparing City Development Plans) and carry out mandated reforms. As the Report on Indian Urban Infrastructure and Services (2011) notes, ULBs suffer from over-staffing of unskilled, untrained manpower and paucity of technical staff and managerial supervisors.

The fragmented institutional framework of municipal governance makes concerted action of service delivery problematic. For instance, Agarwal (2006) describes how responsibilities related to urban transport are discharged; strategic and policy functions are carried out by state-level transport departments, planning and regulation by either a government agency or a public agency and actual operation are carried out by either a public agency or a private agency. Coordination between these multifarious agencies takes place only through the office of the Chief Secretary, Chief Minister or State Cabinet. We now turn to recommendations for reforming service delivery at the ULB level.


The Report on Indian Urban Infrastructure and Services (2011) has several recommendations for strengthening the capacity of functionaries including:

  1. Earmarking 2.5% of total capital expenditure for capacity building
  2. Setting up five Indian Institutes of Urban Management to provide state of the art training in urban related areas
  3. Creating a Reform and Performance Management Cell (RPMC) to provide technical assistance in planning, finance, operations and monitoring of urban programmes to state governments and ULBs
  4. Developing a dedicated IT Cadre with a Chief Information Officer for larger cities
  5. Creating a Municipal Cadre with expertise in city and regional planning and allied areas

As the Report notes, “The governance reforms outlined … require a radical change in the old ways of doing business at all levels of government.” The success of future programmes like New Improved JNNURM (NIJNNURM) hinges on reforms that build institutional and human resource capacity.


  1. Agarwal, O. P. Urban Transport. In India Infrastructure Report. Oxford University Press. 2006
  2. Ahluwalia, Isher Judge. Report on Indian Urban Infrastructure and Services. High Powered Expert Committee (HPEC) for estimating the investment requirements for urban infrastructure services. March 2011
  3. Mohanty, P.K et al. Municipal Finance in India: An Assessment. Development Research Group,Reserve Bank of India. December 2007
  4. Mukhopadhyay, P. Whither Urban Renewal? Economic and Political Weekly, Vol. 41, No. 10, pp. 879-884. Mar. 11-17, 2006
  5. Audit Report (Panchayat Raj Institutions and Urban Local Bodies), Karnataka 2009-10