Context:

Recently, the Comptroller and Auditor General (CAG) has highlighted the critical gaps in the functioning of Urban Local Bodies (ULBs) across 18 States. 

Key highlights of the report:

• Concerns about Fiscal Health: Only 32% of the total revenue of Urban Local Bodies (ULBs) comes from their own sources, with the remaining funds being grants from state and central governments.
  Additionally, there is a 42% gap between the revenue resources and expenditure of ULBs in 18 states.
• Staff Shortages: Despite the rapidly growing urban population, ULBs in most states face a significant shortage of manpower.
• Reservation for Women: In six out of 14 states, 50% of city council seats are reserved for women, exceeding the constitutional mandate of 33% reservation.
• Ward Delimitation: Only four out of 15 states viz. Himachal Pradesh, Kerala, Maharashtra, and Tamil Nadu, have empowered their state election commissions to handle ward delimitation. In the remaining 11 states, this responsibility lies with the state governments.
• Direct Election of Mayors: Direct mayoral elections are conducted in only five states: Chhattisgarh, Haryana, Jharkhand, Tamil Nadu, and Uttarakhand.
• Devolution of Functions: While 17 of the 18 functions have been devolved to ULBs in 18 states, only four functions viz. management of burial grounds, provision of public amenities, prevention of cruelty to animals, and regulation of slaughterhouses, have been fully devolved with complete autonomy.
• Furthermore, only nine states (Chhattisgarh, Haryana, Jharkhand, Madhya Pradesh, Maharashtra, Manipur, Odisha, Punjab, and Tripura) have devolved all 18 functions.

74th Constitutional Amendment Act (CAA), 1992

• It came into effect on 1 June 1993, and introduced Part IX A (the Municipalities) which deals with the issues relating to municipalities. 
• The Act provided constitutional status to the Urban Local Bodies (ULBs). 
• Article 243W of the 74th CAA authorised the State Legislatures to enact laws to endow local bodies with powers and authority as necessary to enable them to function as institutions of Self-Government and make provisions for devolution of powers and responsibilities. 

Key recommendations of the report:

• Release of Funds: State governments should ensure that grants allocated to Urban Local Bodies (ULBs) are released in full and on time through effective monitoring mechanisms.
• Necessary Changes: It is essential to conduct municipal elections every five years. It also establishes planning committees to manage unplanned urbanization and empowers state finance commissions to focus on improving fiscal management.
• Delegation of Power: State governments should consider granting ULBs adequate authority over manpower management, including the assessment and recruitment of necessary staff.
• Scientific Budgeting: ULBs should be encouraged to prepare budgets scientifically, incorporating realistic projections of available funds to enhance financial planning and management.

Comptroller and Auditor General (CAG)

• CAG is an independent authority under Article 148 Constitution of India.
• He is head of the Indian Audit and Accounts Department.
• Appointment: He is appointed by the President of India by a warrant under his hand and seal and holds office for a period of six years or up to the age of 65 years.
• Removal: He can be removed by the President under Special procedure for removal (like a Supreme Court Judge). The removal of the CAG requires the assent of the bill with the special majority on grounds of proven mis-behaviour and incapacity.