At the Union Government level, a unified Ministry of Local Government would signal an end to the tendency to work in silos, commitment to address issues related to rural-urban transition in a holistic manner and a fresh look at the Constitutional, legal and administrative framework for the Union, State and Local Governments in a federal set up. It would also mark the first step in implementation of the Union Government’s stated policy of providing ‘maximum governance with minimum government’. Or else, it would remain an ‘electoral rhetoric’ writes Sunil Kumar, a former civil servant.
Plans are reportedly afoot to bifurcate the Union Ministry of Housing and Urban Affairs (MoHUA) into two departments with one focusing solely on Delhi and the National Capital Region.[i] This is reportedly being done to give effect to the Prime Minister’s vision of making New Delhi a world-class capital.
News emanating from the western state of Maharashtra mentions that the State Government has approved the creation of ten new departments to enhance efficiency and facilitate quick decision making. It proposes to increase the number of departments from 33 to 43 through reorganization without creating a single new post. So what happens in Delhi is quickly replicated in the States.
Nothing very exceptional in these news reports except that this is being done by a political party and a Prime Minister who had promised ‘maximum governance with minimum government’. However, there seems to be nothing on record to suggest that in the past twelve years any effort has been made to streamline and reorganize the Ministries and Departments in the Government of India or in any State with an eye on improving governance. Further, it serves to illustrate that good recommendations, aimed at precisely realizing the aforesaid goal, continue to gather dust in files. Officers show great alacrity in carrying out orders emanating from the ‘top’ even if they seem to confuse the policy making and agency functions of the Government and at variance with stated goals of the Government itself.
The issue of reorganization of government has been addressed in considerable detail by the two Administrative Reforms Commission (ARC) and also by the Central Pay Commissions, most notably the Fifth & Sixth Central Pay Commissions and the Expenditure Reforms Commission set up in 2002. Readers may be shocked to learn that after independence there were just 15 Cabinet Ministers in the Union Cabinet. Today we have 72 Ministers in the Union Council of Ministers which includes 30 Cabinet Ministers apart from the Prime Minister, 5 Ministers of State with independent charge and 36 Ministers of State. Historically, the largest Council of Ministers was not under Prime Ministers heading coalition governments but under the present Prime Minister in his previous term when in 2021 the total number stood at 78, just three short of the Constitutional ceiling of 81[ii].
The way departments are created/ bifurcated in the States is much more whimsical. So much so that in Uttar Pradesh the joke in the 1990s was that there would be one Secretary, Department of Khel (Sports) and one for Department of ‘kood’ (Jump) as even ‘khelkood’ could be bifurcated into two!
In the Thirteenth Report captioned ‘Organisational Structure of Government of India’ submitted in April 2009, the second ARC had recommended that the number of Cabinet Ministers could be restricted to below 25 and several separate Ministries could be clubbed under one. This recommendation becomes significant considering that presently there are 54 Ministries and 93 Departments in the Union Government.
The Second ARC had cited three examples. In the first instance a Ministry of Local Government could be created comprising of existing Ministries/Departments of Rural Development, Drinking Water Supply, Housing & Urban Poverty Alleviation & Panchayati Raj. The proposed Ministry of Transport could include Shipping, Railways, Road Transport & Highways and Civil Aviation and Ministry of Energy comprising of Power, New & Renewable Energy and Petroleum & Natural Gas.
Without going into great details into the recommendations made by the Second ARC, in this paper I will focus on the need for reorganization of Government and creation of a unified Ministry/Department of Local Government both in the Union and the State Governments.
To begin with, the recommendation made by the Second ARC regarding the Ministries/Departments to be subsumed under the proposed Ministry of Local Government makes eminent sense. Perhaps Department of Land Resources could also be subsumed under it as the subjects are included in the Eleventh Schedule. It is a pity that this recommendation has not been acted upon by successive governments over the last seventeen years.
To put things in perspective, it may be noted that there was no Ministry/Department of Rural Development, Drinking Water Supply, Housing & Urban Affairs and Panchayati Raj in the Union Government in 1947 or in 1952. The Department of Rural Development was created in 1974 under the Ministry of Food & Agriculture. A separate Ministry was created only in 1979 when Ministry of Rural Reconstruction came into being. Rural Drinking Water Supply was handled by the Ministry/Department of Rural Development before a separate Department of Drinking Water Supply (DDWS) was formed in 1999 under the Ministry of Rural Development (MRD). It became a separate Ministry in 2011 and since 2019, DDWS is part of Ministry of Jal Shakti.
Panchayati Raj was just a separate Division in the Department of Rural Development till 2004 when a separate Ministry of Panchayati Raj (MoPR) was carved out. Likewise, while the present avatar of the Ministry of Housing & Urban Affairs (MoHUA) came into being in 2017 through the merger of Ministry of Housing and Urban Poverty Alleviation, its roots can be traced back to 1952 when Ministry of Works, Housing & Supply was looking after some matters related to urban areas. In 1966, this Ministry’s name was changed to Works, Housing & Urban Development. It was only in 1985 that a separate Ministry of Urban Development was created.
Following the coming into force of the 73rd and 74th Constitution Amendment Acts (CAA), the Panchayati Raj Institutions and urban local governments received constitutional recognition as the third tier of local self-government. However, local government is a State subject listed at Entry 5 in List 2 in the Seventh Schedule. So is water supplies at Entry 17 in List 2. The Eleventh and Twelfth Schedule list 29 and 18 subjects which the State Government is expected to transfer to the rural and urban local governments respectively. These include inter alia rural housing, drinking water, rural poverty alleviation, social welfare, roads, land improvement, implementation of land reforms, land consolidation and soil conservation in Schedule XI and urban poverty alleviation, provision of urban amenities, urban planning including town planning, land-use conversion among others in Schedule XII. In the Constitutional scheme of things, it seems there is no place for a large Ministry of Rural Development or Department of Drinking Water Supply and/or Ministry of Housing and Urban Affairs running centrally sponsored schemes (CSS) which fall squarely under the purview of local governments.
It may be noted that currently MRD is handling rural infrastructure schemes like rural roads and rural housing, poverty alleviation & rural livelihood schemes like NRLM, rural employment schemes like VB-GRAM-G, social welfare schemes like NSAP, land resource management etc. Except the rural roads scheme, which is building rural infrastructure and rural employment scheme which permits taking up works linked to rural infrastructure, all other schemes are individual beneficiary oriented schemes.
Based on the principle of subsidiarity, all these schemes can be best implemented by the local governments and not the Union or State governments. That explains why these are included in the Eleventh Schedule. However, since Government of India (GoI) provides the largest share of funds (sixty percent), no State Government objects to CSS. It gives the Union Minister and the MPs an opportunity to take credit and also garner votes of beneficiaries. The Union Government has been singularly targeting beneficiaries of all CSS as potential voters of the ruling party/alliance. Same holds true for the State Governments and the State Schemes.
Likewise, a close look at the Annual Report 2024-25 of the MoHUA tabled in Parliament reveals that urban local governments and quality of governance in urban areas do not find even a cursory mention in the 350+ page report! The entire focus seems to be on large urban transport projects such as Metro, Rapid Rail Transport Systems (RRTS), urban redevelopment projects such as Central Vista and the like. The workings of Delhi Development Authority (DDA) again figures high on the Ministry’s ‘to do’ list. Given its preoccupation with works and housing projects in Delhi and the National Capital Region, it may be a boon in disguise if all work related to urban local governments and CSS are taken away and allocated to a new unified Ministry of Local Government which would look after all rural and urban local governments and implementation of CSS therein.
A close analysis of the working of rural and urban local governments over the last thirty three years suggest that the health of rural local governments is comparatively better than the urban local governments. It is widely believed that creation of a separate Ministry of Panchayati Raj (MoPR) in 2004 helped focus attention on governance issues especially in Gram Panchayats. The same however cannot be said of Block and District Panchayats which have, so far, received scant attention.
Academics accept that almost 90 percent of the studies and research have focused upon rural local governments rather than urban local governments. Hardly any attention has been paid by the Union and/or the State governments to strengthen the smaller Municipalities and Town Areas in urban areas. The issues related to Census Towns (which show urban characteristics but remain Gram Panchayats) do not get required attention either.
As per 2011 Census data, about 32 percent of India’s population was living in urban areas. This is likely to touch 40 percent by 2030 and exceed 50 percent by 2047. Although, some experts believe that almost 60 percent of the country’s population could already be residing in urban areas![iii] This imparts greater urgency to addressing the urban governance issues without any delay.
The rapid pace of urbanisation is there for all to see. Government is committed to ensuring that quality of life and delivery of services to citizens must be the same no matter whether they are residents of rural or urban areas. In the digital age, rural-urban distinction is fast becoming a misnomer. Going ahead what would matter for citizens is whether they are residents of a smaller viilage/town or a larger town/city, the quality and reliability of services delivered by the local governments and the institutions put in place for facilitating participation of citizens in local governance issues.
Seen in this light, there is a strong case for setting up a unified Ministry of Local Government (MLG) in the Union Government and a Local Self Government Department (LSGD) in the State. This would facilitate the transition from rural to urban and focus attention on governance issues especially those related to strengthening institutions like the Gram Sabha/Ward Sabha in Gram Panchayats and creation of similar institutions in urban local governments. It could also help focus attention on glaring critical gaps and design flaws in the existing system. The state specific legal framework for local governments would need close scrutiny and perhaps even revamp.
The financial architecture would also need to be reimagined. In fact, after 1993, there is a strong case for including the local governments as a stakeholder in development schemes whether funded by the Union or State Government or both. This would imply that the local governments must be made to bear a part of the financial burden of the CSS or State schemes which they choose to implement in their respective areas. The absolute dependency of local governments on transfer of funds from the Union and State Governments would need to be addressed. This would call for granting a share in GST to local governments (LGST) on the lines of CGST and SGST and creation of a Consolidated Fund for Local Government apart from incentivising local governments to develop their own sources of revenue (OSR).
The responsibility for setting up suitable administrative set-up for implementing the schemes would also be of the local government. Hence, the need for transferring functionaries of related departments of the State Government and their administrative control to the local governments assumes added urgency.
Further, parallel administrative set-ups like the District Rural Development Agency (DRDA), State Urban Development Agency (SUDA), the District Urban Development Agency (DUDA) need to be disbanded and/or transferred whole-sale under the control of local governments. The parastatal organizations like the Jal Nigam would also need to be transferred to the local governments. These could be brought under the control of District Panchayats.
There is a strong case to recast Block and District Panchayats and bring urban areas too under their jurisdiction. This would resolve coordination related issues and make planning a more integrated exercise. These could also provide the institutional and technical support to Gram Panchayats, Town Areas, Municipalities and Municipal Corporations in the field of financial management, geo-spatial planning, digital and legal matters among others.
Kerala has set up a unified Local Self-Government Department (LSGD) to look after both rural and urban local governments. Kerala is also one state where it is difficult to distinguish between the rural and urban areas and the rural-urban transition is happening at the fastest pace. While it has addressed some issues, a lot more remain unaddressed. These call for policy changes and strong political commitment to strengthening local governments. It remains to be seen what steps the new UDF Government in Kerala would take in this regard as it has come to power on the strong messaging that it was against centralization of power in the State Government (read the Chief Minister’s Office) and all for further strengthening local governments.
At the Union Government level, a unified Ministry of Local Government would signal an end to the tendency to work in silos, commitment to address issues related to rural-urban transition in a holistic manner and a fresh look at the Constitutional, legal and administrative framework for the Union, State and Local Governments in a federal set up. It would also mark the first step in implementation of the Union Government’s stated policy of providing ‘maximum governance with minimum government’. Or else, it would remain an ‘electoral rhetoric! In addition reduction in the number of unnecessary CSS would free up resources for priority works of GoI and for transfer of additional resources to the States and the Local Governments. The Union Government could then persuade the State Governments to transfer more funds, functions and functionaries to the Local Governments and reduce the bloated state machinery. Keeping in view the principle of subsidiarity, most functions can be best performed by the local governments. The policy issues relating to local governments can no longer be ignored as strong local governments would be the engines of growth and centres of job creation in manufacturing as well as service sectors. It is one area where the States can take the lead and not necessarily follow the cue from the Union Government. This role reversal would be a welcome change and go a long way in strengthening cooperative federalism and multilevel governance in the country.
(Sunil Kumar is a visiting Senior Fellow associated with the Centre for Cooperative Federalism and Multilevel Governance in Pune International Centre and a former civil servant. Views expressed are personal.)
[i] On Govt table: A separate dept in Urban Affairs Ministry only for Delhi; The Indian Express, Friday, May 22,2026; Pg.1-2, New Delhi, Late City Edition.
[ii] The 15 percent ceiling of the total number of Members of the Lok Sabha was inserted vide the Constitution (Ninety-first Amendment) Act, 2003, s. 2 (w.e.f. 1-1-2004).
[iii] Wake up Governments: Most of India Lives in Her Cities” – Vijay Kelkar & Abhay Pethe, TOI – 26.02.2024
