The 74th Constitutional Amendment Act of 1992 is a landmark constitutional amendment that gave formal recognition and protection to Urban Local Bodies (ULBs), or municipalities, in India. Before this Act, urban local bodies often lacked real power and could be superseded or have their elections postponed indefinitely by state governments, which eroded the foundation of grassroots self-government. The amendment was enacted to solve this problem by providing a constitutional basis for democratic decentralization in urban areas, making ULBs the third tier of governance.
The Act, which came into force on June 1, 1993, inserted a new Part IX-A, titled "The Municipalities," into the Constitution, consisting of Articles 243-P to 243-ZG. It mandates the establishment of three types of municipalities based on the size and area: Nagar Panchayats for transitional areas, Municipal Councils for smaller urban areas, and Municipal Corporations for larger urban areas. Key provisions include a mandatory five-year term for all municipalities and the requirement to hold elections within six months of dissolution. The Act also introduced mandatory reservation of seats for Scheduled Castes (SCs), Scheduled Tribes (STs), and not less than one-third of the total seats for women.
The amendment added the Twelfth Schedule to the Constitution, which lists 18 functional items that may be entrusted to municipalities, such as urban planning, water supply, public health, and slum improvement. It also mandates the constitution of a State Election Commission to conduct municipal elections and a State Finance Commission (SFC) to review the financial position of municipalities and recommend the distribution of revenues. The 74th Amendment is closely connected to the 73rd Constitutional Amendment Act of 1992, which provided constitutional status to rural local bodies (Panchayats). The core structure and provisions of the 74th Amendment have remained the same since its enactment, providing a uniform framework for urban governance across the country.