4.1 Key features
The Model Municipal Law, 2003 prepared by Ministry of Urban Developmentand Poverty Alleviation (the erstwhile undivided Ministry) is an initiative to implement the provisions of the 74th CAA for empowerment of urban local bodies and provide legislative framework for implementation of the Urban Reform Agenda. The Law is expected to enhance the capacities of ULBs to leverage public funds for development of urban sector and provide an environment so that urban local bodies can play their role more effectively and ensure better service delivery.
The salient features of the Model Municipal Law are:
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Constitution of the Municipal Area based on population, classification of the three levels of Municipalities and its constitution.
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All the executive actions of the Empowered Standing Committee shall be taken in the name of Municipality.
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Indirect election of Mayor or Chairperson for a five year term.
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Constitution of Wards and Ward Committees.
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State Level Municipal Establishment Audit Commission to review the staff status.
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Classification of Municipal functions into:
a) Core municipal functions- including watersupply, drainage and sewerage, solid wastemanagement, roads, etcetera;
b) Functions assigned by Government3; and
c) Other functions.
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State government can dissolve an elected body if it shows default in performance or abuse of powers, after giving due notice and review by a committee.
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Provision to implement recommendations of the State Finance Commission.
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“Municipal fund” with separate accounts for various services.
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Preparation of budget estimation of Municipality.
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Preparation of State Municipal Accounting Manual and appointment of the Municipal Accounts Committee.
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State Government can appoint a professional chartered accountant as auditor.ULBs to prepare balance sheet of the assets and liabilities annually.
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Municipalities to prepare an inventory of properties each year.
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State Government to frame a Comprehensive Debt Limitation Policy laying down the generalprinciples of borrowings of loans with regard to Municipalities’ financial capacity.
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Power of municipalities to raise loans.
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Internal revenues of Municipality and power to levy taxes, user charges, fees and fines, development charge, advertisement, other taxes and tolls.
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Enable participation of private sector and NGOsin construction, financing and delivery of servicesincluding billing and collection.
3The “functions assigned by Central/ State Government” may be undertaken subject to the underwriting of the costs by the concerned levels of government.
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Enable setting up of State Municipal RegulatoryCommission that will determine user chargesand standard of services suggest avenues ofprivate sector participation and ensure fair dealto citizens.
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Agenda for urban environment management. Municipalities to prepare annual environmental andsubsidy reports
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Provides for the representation of Municipalities in Districtand Metropolitan Planning Committees.
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Provision for improvement in existing area such as removal of congested buildings
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Constitution of Municipal Streets Technical Committee and other aspects related to streets
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Unique Premises Numbering System
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Provisions for buildings
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Municipal Licenses
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Maintenance of Statistics
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Management of Disasters
4.2 Suggested changes in the Law
The Model Municipal Law (MML) was introduced more than a decade back; it is pertinent that the provisions of MML need to be updated to bring it in harmony with the recent developments in the Municipal Law. MoUD study undertaken by NUIA to review the MML, suggested various points for revision of the provisions given in MML, based on their status of implementation.
There are various provisions in the current scenario that are vital for MML to bring it in line with the new developments in municipal governance. Provisions like reservations of seats for Women/SC/ST/BC in Municipality, Local Bodies/Municipal Ombudsman, functions and duties of Area Sabha Representative, disclosure of various documents relating to municipal affairs, accrual based double entry system of accounts, defining functions and responsibilities of DPCs and MPCs are suggested to be detailed out under the MML.
The above mentioned NUIA study has also highlighted lack of critical provisions in MML, such as, municipal ombudsman, accrual based double entry system; public disclosure of budget, financial and accounts of municipality; public private partnership (PPP) in the delivery of basic services of the municipality, and in performance of infrastructure projects.
4.2.1 Clause(s)for inclusion in the present MML
Definitions of “area sabha” and “area sabha representatives” shall be defined in the MML.
MML to be the Model Law for States to follow. It should clearly have a clause defining “Annual Rateable Value” / “Capital Value” / “Unit Area Value”/ “Annual Letting Value.”
Definition of “Local Bodies or Municipal Ombudsman”/ under jurisdiction of LokAyukta should be defined. According to 13th Central Finance Commission, the state government must put in place a system of independent local body Ombudsman. However, it is left to the States to decide which system to follow.
Provision on reservation:Article 243 T of the Constitution of India provides for reservation of women, SC, ST, and BC. Since MML supplement the aims of 74th CAA, it should be incorporated in MML.
Provisions relating to Local Bodies/Municipal Ombudsman:The Second Administrative Reforms Commission and the 13th Finance Commission have recommended that a separate Ombudsman for local bodies be constituted to look into the complaints of corruption and mal-administration against the functionaries of local bodies.
This may also include Staff’s review on the Non- Ethic practises and provision for the protection of whistle blowers. In case, the municipality opts to create a position of local bodies’ ombudsman, it is necessary to add provisions relating to appointment, functions, powers, term of office, conditions of service, procedure of disposal of complaint filed to his office etcetera.
Formulation of citizen’s charter – provision for Citizen’s Charter formulation under “Action Plan for Effective and Responsive Government” (1997) to be suggested in the MML. Citizen's Charter and Grievance Redressal Bill, 2011 is also under consideration in Parliament, which will support the amendment in MML. The role of the charter to be well defined including Grievance Redressal other than those handled by Local Bodies/Municipal Ombudsman and focus on development of egovernance mechanisms for Public accountability, Duties of the staff, Transparency and People’s participation.
Accrual Based Double Entry Accounting System: Currently double entry accounting system is followed by most of the Municipalities in the country. However, as per the mandate of the JnNURM, accrual based accounting system should be followed as it estimates the future generation of revenue and expenditure of the Municipality. MML does not mention this provision. Since it is one of the important reforms undertaken through JnNURM scheme, it is important that a corresponding provision is incorporated in the MML.
Action taken report: The Municipal Authorities must send an action taken report to the State Government on the defects detected by the government auditor.It is imperative that this provision should be included in MML for other states to follow.
Establishment of Escrow Account for any particular project:An escrow account for particular projects helps the municipality to maintain their accounts clear in terms of borrowing and in terms of future borrowings needs of the municipality. It will increase transparency for the lenders/stakeholders. Considering few states have already established an escrow account, such provision may be added to MML as an option for the municipalities that wish to opt for it.
Property Tax assessment: MML should have a provision regarding manner of assessment of property tax. Municipal Acts must specify whether an assesse would file a Self-assessment or a bill would be presented to him by the municipality.
Functions and Responsibilities of DPC & MPC: MML only speaks of constitution of these committees, which does not suffice the purpose. Therefore, it is suggested to define the provisions relating to composition, role and responsibilities of MPC/DPC as well as their jurisdictions as envisaged under the constitutional provisions including specifying the organization which will function as the technical and administrative secretariat of the MPC/DPC.
Fire hazard and disaster risk response: One of the conditions of the 13th Central Finance Commission was that all the municipal corporations must put in place a fire hazardresponse and mitigation plan for million plus cities. Therefore, MML should contain a provision with respect to fire
hazard response plan, if not for all the Disaster managements. URDPFI recommends fire hazard disaster risk response to be incorporated focusing on reduction of vulnerability.
State Regulatory Body - The Urban and Regional Development Regulatory Authority suggested by to be established by State Governments through statutory support should play a crucial role to regulate and monitor the functioning of Development bodies. Grievances redressal system, roles and responsibilities of authorities to be integrated with the State Regulatory Body. Therefore, functions of State Regulatory Body to be incorporated in the Model Municipal Law.
4.2.2 Additional Provisions
4.2.2.1 State Property Tax Board / Act
The 13th Central Finance Commission recommended for a State Property Tax Board to put in place an independent and transparent procedure for assessing property tax.
MML provides for a provision mentioning the State Property Tax Board, however, it does not clearly state the provisions relating to its establishment, composition, functions, powers, accounts, budget, etc. It could be a useful provision since property taxation is an important source of revenue and this would help improve the valuation of the property in a systematic and transparent way.
4.2.2.2 State Finance Commission
The 13th Central Finance Commission suggests that the States Governments must prescribe through an Act qualification of persons eligible for appointment of the State Finance Commission (SFC). Therefore, MML is suggested to prescribe a provision for establishment of permanent SFC cell.
4.2.2.3 Notification with Respect to Service Levels
The 13th Central Finance Commission suggests that State Government must notify or cause all municipalities to notify at the end of the fiscal year - the service standards for four service sectors (Water Supply, Storm Water Drainage, Sewerage and SWM). For a step towards the compliance of such reforms, MML must contain this provision.
4.2.2.4 Human Resources Policy Reform
Services provided by local bodies for SWM, Sewage, Water Channels and Electricity plays a crucial role in maintaining environmental standards of city and as well quality of life of residents. Municipal law looks at only the performance of this function. However, the most neglected part of this function is the health hazards of the employees, who are directly related to perform this function. For mitigating health hazards to the employees of the Municipality dealing in the works relating to sewerage, garbage collection, etc. - Municipality should provide proper gear to its employees like uniforms, gloves, gum boots, masks, first-aid kit etc. Even though human contact cannot be avoided in the performance of these tasks, the only minimal requirement of proper
equipment and gear should be provided to employees. Inclusion of this provision is important to realize the vision of smart, sustainable and responsible cities.
4.2.2.5 Exemptions as incentive
It is essential to provide for the extent of Exemption in the property taxation on defined conditions. Property tax exemption can be provided for following or implementing certain desirable projects like, Green development, Rain water harvesting, Solar power installation in building and Green building etc. as an incentive. As per the NUIA study, Municipal Acts of Bihar has no provision mentioning the exemptions from property taxation, but many other states have already provided for exemptions. It is suggested that MML provide for any such provision.
4.2.2.6 Rain Water Harvesting Mandatory
It is one of the optional reforms under JnNURM.Looking at the urban growth, rainwater harvesting should be a mandatory provision in all the Acts to recharge groundwater and augment overall water availability. Such provisions in the Municipal Act may ensure its application in the Local Area Plans and Special Purpose Plan. It is suggested to include this in the MML and places where it can be made mandatory with in the building bye laws depending upon enforcement capabilities and local conditions.
The Model Municipal Law, 2003 is appended as Appendix R of Volume II B.