Current-Public-Administration-Magazine-(Septembert-2017)- Good Urban Governance - Municipal Management Perspective

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Urban Development

Good Urban Governance - Municipal Management Perspective

The term or the concept of ‘Good Governance’ is not a new one. It is one of the basic concepts, which the human society has confronted with political discourse throughout the course of history. The discipline of political science has developed with the changing meaning of this concept. The present context of the term or concept of ‘Good Governance’ is quite different and much broader. It is shadowed and shaped by the process of globalization, economic liberalization and privatization.

The process of globalization, economic liberalization and privatization that world is witnessing since 1980 (in India since 1991) is bringing about landslide change in the philosophy behind the role of government, and in the relationship between the state and its citizens. Citizens are perceiving themselves more as consumers than a ‘subjects’ with respect to the government (State). Governance is increasingly being seen as a participatory and contractual process in which citizens wish to play a prominent role in designing, implementing and monitoring public policies. The fact that the productivity and well being of an individual now depends not only on his own talents and hard work, but also largely on the quality of governance and the quality of life made possible by the government is a new dimension acting heavily on the concept of ‘Good Governance’.

In this changing context, it has become increasingly necessary for the government to respond to the needs of its citizens, who are now to be looked upon as its customers, by measuring their responses to its initiatives. The government is, now expected and is actually forced to pursue ‘Good Governance’ based on objectives of transparency, accountability and efficiency for fulfilling its ultimate objective of the citizens’ welfare at large.

The case for ‘Good Governance’ is becoming stronger as the philosophy of governance is changing with the rise of expectations and competitiveness in society (especially in the urban society).

An urban local government (ULG) is a public institution concerned with community welfare, social justice and economic prosperity of its people. The urban local body is supposed to manage resources in public trust and (among all tiers of government) is closest to the people. These two aspects play a prime role in deciding the quality of the urban life and thereby the level of urban productivity. They make the three sutras of new millennium – accountability, transparency and efficiency, indispensable for the ‘Good Governance’ of urban local bodies. Thus by its very nature or by its constitution it has to be efficient, transparent and accountable to the public. The objective of ‘Good Governance’ is not only philosophically relevant but has become a compelling necessity for urban local bodies.

Though the philosophically relevant concept of ‘Good Urban Governance’ has become compelling necessity, in practice it has not taken firm root in ULGs of India. The Government of India launched this movement two years ago, but most of the State Governments and almost all ULGs have failed to take this movement forward. ‘Good Urban Governance’ is equated with the technology savvy cosmetic efforts like starting single window system or GIS based information center or automated voice response system or making some information or services available on web or internet or putting up hi-fi touch screen kiosk etc. Good urban governance should not be something external or cosmetic, it has to spring internally from every aspect of an ULG and needs to integrate into its culture.

This paper is broadly divided in the four parts – Part one attempts to describe the concepts of ‘Good Governance and Good Urban Governance’, while part two tries to outline the management and finance function perspective of ‘Good Urban Governance’. Part three of the paper examines management and finance function of Indian urban local government and enumerates how it fails to deliver ‘Good Urban Governance’. The last part of the paper enlists suggested municipal reforms from the management and finance function perspective for attaining ‘Good Urban Governance’.

Part I

Concept of ‘Good Governance’ and ‘Good Urban Governance

Governance is "the manner in which power is exercised in the management of a country's economic and social resources for development." For a city, governance is the exercise of power to manage a city's economic and social development.

Traditionally governance is equated to ‘everything that government does attain general welfare of the people. The present concept of governance is quite different and broader. Governance is now viewed as a broader notion than government. It involves governments (exercise of power) but also civil society (citizens, civic institutions, etc) and management of resources. When we talk about governance in the urban management context we are talking about all the formal and informal laws, regulations, frameworks, systems and processes that shape the way in which an urban local government operates.

The formal governance structures relate to the political and legal framework in which a city operates. The informal governance structure refers to behavior, systems and processes that have become part of the way the city does business through non legal (informal) influences such as culture, historical traditions, social norms, business practices etc.

From an urban local government perspective good governance means:

  • Involving the community in identifying their wants and needs - this implies that the city government will uphold democratic processes and be accountable to the people of the city
  • Developing policies and approaches to meet community needs with the involvement of the community in the process. (For example, involving the community in developing the strategic vision for the city)
  • Making sure that all levels of the government system understand their roles and responsibilities (and the community should also know what each level of government is responsible for)
  • Developing effective intergovernmental relationships
  • Ensuring that the allocation of resources across levels of government is fair and equitable
  • Encouraging innovative management that contributes to successful outcomes for the community
  • Determining ethical standards of behavior for those working within government (as politicians or administrators) and monitoring people's performance to make sure they do meet those standards.

A critical element of good governance at the urban local government level is the establishment of an inter-governmental institutional framework that:

  • Clearly specifies the responsibilities of each level of government
  • Provides the appropriate authority to support the delegated responsibilities
  • Specifies and enforces a code of conduct to underpin administration
  • Encourages private sector and civil actors to participate in development or management.

In addition, good urban governance requires:

  • A sound public - private partnership
  • Effective government and citizen interaction

Thus ‘Good Urban Governance’ refers to the legal, political and networking framework in which good management flourishes and in which public – private partnership and peoples participation has sufficient legitimate space. An urban local government is now required to perform both governance and management roles in partnership with private sector and civil societies (citizens, civil institutions) in order to attain good urban governance.

Part II

Municipal Management Perspective of Good Urban Governance

The modern concept of Good Governance (and of-course of good urban governance) is not confined only to improving the regulatory, maintenance and development function of a government. Besides this governing role, it includes a management (attaining goals by using resources efficiently and effectively) role, partnership with private institutions and participation of civil societies.
The concept of Good Governance essentially postulates that the government is an organization working in social ecology and is confronted by the problems of employing limited resources (four ‘M”s – man, machine, material and money and now information) judiciously to achieve maximum common goals and objectives. Thus the concept of good governance has, besides legal, political and social perspectives two additional perspectives - one, management perspective and two, peoples’ participation (private and civil institutions) perspective. Every endeavour to achieve good governance inevitably must have management and peoples’ participation perspective. This paper, as mentioned earlier, deals only with the management perspective of good governance.

The management improvement perspective of the good governance concept has not received due attention in India in all forms of government and governmental organizations. The management perspective (which includes the finance function) of good governance is much more relevant in case of urban local government than any other level of government. This is because of its pronounced dual character. Urban local government is not only a ‘miniature body politic’ but at the same time it is also a ‘body corporate’. It is this ‘body corporate’ character of an urban local government which makes management improvement perspective most essential for attaining good urban governance. Before we outline management perspective of good urban governance let us describe what term management and governance mean. How can they be separated to have focused attention? And what are the elements of good governance.

Management Role

  • Management is defined as the process that ensures the goals of an organization are achieved and resources are used efficiently and effectively. Good management involves:
  • Ensuring that the vision, goals and strategies for the organization are determined in consultation with key stakeholders and the governing body
  • Developing plans to ensure the vision, goals and strategies are achieved
  • Ensuring the objective consideration of options and choices; of advantages and disadvantages, costs and benefits and of risks
  • Effectively managing the resources of the organization (people, financial, physical) to achieve results
  • Monitoring the performance of the organization and of individuals
  • Adjusting strategy when the environment changes
  • Accepting responsibility for performance.

Good management requires a wide range of skills and abilities including:

  • The capacity to listen and learn from stakeholders and others
  • The ability to provide leadership and direction in the development and achievement of the vision
  • The ability to identify issues and solve problems
  • The capacity to effectively and efficiently utilize financial and physical resources to achieve objectives i.e. Using resources in a cost effective way to achieve the best results.
  • The ability to inspire, lead and manage people (including the ability to ensure staff have the appropriate skills, knowledge and attributes required to do their jobs effectively.)

Governance Role

Through community driven advocacy, strategy and policymaking and through the purchasing of products and services determined as part of the annual budget and plan, local governments exercise their power to manage the city's economic and social development i.e. Elected representatives perform their governance roles.

Through the delivery of quality services via contracts with public employees or private contractors and through the enforcement of regulations, local government management functions are performed by employees.

  • Specifically, governance roles include: Strategy setting - determining, with stakeholders, the longer term direction for the city including what services are a priority and what are not
  • Policy making - setting the framework for implementing the strategies (for example, the city may decide its policy on transport that is it will not provide buses; but it will support the private sector to establish an effective bus service through subsidies, licenses etc.
  • Defining service standards - this means deciding the level of service the city will provide - For example, will the city aim for a high cost air conditioned, frequent bus service or a low cost, basic bus type service
  • Monitoring the administration's effectiveness in delivering on the priority strategies and services
  • Assuring the provision of information to the community to enable the community to effectively participate in local government affairs.

The urban local government administration develops its strategies and policies based on the direction for the city set by the municipal council (usually determined by the political wing). The management role of local government thus lies in the service delivery and enforcement of regulations. Management roles are usually in:

  • Delivery of services - this means actually making sure the services are provided to the city either by public service provision or through private sector provision. For example, a city may decide it will not operate a bus system but will contract the private sector to deliver. The city will take on the role of defining exactly what is required of the private sector provider and select suitable providers based on their requirement. The city will monitor the performance of all service providers and intervene when there are problems.
  • Enforcement of regulations - cities usually have rules and regulations that they are required to administer and enforce. This may be in relation to building (permits to build, inspections to ensure quality etc) or parking rules or ……

Management's job is to ensure services are delivered in an efficient and effective way to the standard required.

Elements of good government –

These elements should be reflected in the governance and management structures and processes of the city. Good government requires

  • Accountability
  • Transparency
  • Contestability

Accountability – Accountability means decision makers accept responsibility for their decisions. Good governance and management requires clarity about where responsibilities lie. Accountability means having information available and processes applied so that those responsible for decision-making can be called to account for their decisions.

The hierarchy of accountability for local governments will usually be - the elected Mayor and Councilors are accountable to the public • the Municipal Commissioner is accountable to the Mayor and Councilors • Local government staff are responsible to the Municipal Commissioner. Being accountable means: • Articulating collective and individual responsibilities through plans and performance agreements • Reporting openly and honestly on progress against achievement of those plans and performance agreements using performance measurement of indicators • Being prepared to accept responsibility when things go wrong (it also means receiving recognition for success.)

Transparency - Transparency relies on a presumption of access to information about how the government works i.e. transparency means operating in a manner that is open, honest and amenable to questions, provided there is ready access to information...A transparent government is characterized by:

  • Public ability to influence decision processes
  • Public involvement on all plans and significant issues
  • The development of annual plans
  • Monitoring against agreed performance indicators
  • Separation of strategy, policy development, regulation setting and funding, from provision and enforcement.

Contestability - Contestability is about using competition to achieve value for money in service delivery. There is greater evidence to suggest that services provided by the public sector are more expensive than those provided by the private sector. There are many reasons for this. Sometimes it is because the public service is very inefficient; sometimes it is because the private sector has better access to technology or resources.

Whatever be the reasons, an ULG has a responsibility to ensure that services are provided in the most cost effective manner.

Contestability means choice in the provision of services through open competition between potential providers. This may compel an ULG to make a choice between public and private service provision. The outcome of contestability is more efficient use of community resources to deliver services required by the public. Contestability means

  • There is competitive bidding for delivery of services and functions to ensure services are delivered by the most efficient and effective means and to the standard required
  • Contracts are established between the purchaser of services (an ULG) and the deliverers of services i.e. business (public or private)
  • Creation of choices for communities for different kinds of local facilities and services through having a mixture of providers.
  • The above discussed management perspective of municipal reforms for good urban governance can be graphically presented as shown in Figure A. Let us now examine its functioning in the Indian urban local governments.

Part III

Management Function in Urban Local Governments

The management function described above constitutes ‘maintenance factor’ as defined in the ‘two factor theory of motivation’ in management science. This theory states that the presence of ‘maintenance factors’ of motivation does not bring great fortune or employee motivation but their absence brings disaster or great employee de-motivation to an organisation. Similarly absence of efficient management function in Indian urban local governments is really acting against the delivery of good urban governance to the people. The presence of efficient management function may not bring 100 per cent good urban governance but will certainly bring considerable good urban governance and more importantly lay foundation or pave way for other reforms like participation of people (private and civil institutions) to attain and to sustain good urban governance. In following passages an attempt is made to describe the present status of management function in Indian urban local governments and how it is hindering good urban governance.

Planning Function

The most basic and pervasive process of human activities, it refers to deciding in advance what actions to take and when and how to take them. It may be a shocking statement to say that there is almost absence of planning in Indian ULGs but it is true. How can a ULG having hundreds of employees and doing multiple of jobs be without a planning function? There does exist planning in ULGs but as a part of reactive or crisis management. What ULGs lack is proactive planning culture. Vision planning or strategic planning is almost absent and operational planning exists in a grossly inadequate manner in ULGs.

Usually one does not find a department, a section or a person in ULG responsible specifically for planning. Rarely one can find a ULG engaged in preparation of long-term or medium term physical planning of the city or a development planning for urban services or even maintenance planning for existing infrastructure or a man-power planning for ULG itself.

The proximity to the people and ever-changing day-to-day field situation has put ULGs into crisis management or reactive management mode and kept them away from planning. But precisely for these two reasons ULGs should have strong planning function as it can help them to plan routine works and be ready for exigencies or non-programmable activities.

In recent years some ULGs have shown recognition of planning aspects by getting urban services related technical master plans and in few cases even city development strategy from professional consultancy firms. This initiative has paid rich dividend to these ULGs. For example preparation of technical master plan for services development has helped ULGs of Ahmedabad, Surat and Vadodara to bring in focus in their infrastructure development. Still it cannot be said that planning has become integral part or culture of their management.

Organizing Function

Orgnising refers to the formal grouping of people and activities to facilitate achievement of the organizations objectives. It’s a vehicle to actualize plans prepared to attain common objectives. In ULGs this function is found inadequate and evolved in an unplanned manner as explained below.

Organisation structure refers to the specific manner in which people are grouped. Usually people are grouped on the basis of the various functions or geographical territories or by product or service lines etc. In ULGs it is possible to group people in different way but such grouping must have inherent logic. In most of the municipal bodies we find mixing up of various basis of structuring organization (grouping people). Another characteristic of municipal organization structure in ULGs is flatness, which means that it lacks various levels of management and has high degree of centralization. For example in Vadodara Municipal Corporation hardly 35 officers control an organization employing more than 11000 peoples. Similarly there is a high degree of centralization, for example in most of the ULGs no officer other than the chief accountant has powers to make payment. The flatness and centralization increases the span of management of municipal officers enormously. There is absence of clear unity of command and appropriate delegation of authority. For example the engineering, health and field level administrative departments handle the solid waste management function simultaneously in many ULGs.

Similarly in ULGs, which have gone for zonal administration (decentralization) the revenue function has become subject to ambiguous unity of command. All these problems associated with organizing are the direct outcome of the fact that organizing function in ULGs is an evolved one rather than structured or planned one. The net result is absence of an appropriate vehicle to carry forward concept of good urban governance.

Staffing Function

An organization may draw up any number of ambitious plans and may structure its organizing function logically and scientifically but if it does not have right kind of people, it can never succeed in implementing these plans. One of the biggest challenges is matching right people with the right jobs. ULGs traditionally suffer in this respect. There are several reasons for this Achilles’ heel of ULGs. To start with there does not exists formal defining of the job, then there was rampant nepotism in earlier days, even today the recruitment process is highly politicized. Most importantly the ULG jobs do not have social status and are on lowest preference scale of job aspirants. In earlier days and even today in case of many ULGs the employment or service terms are inferior compare to other governments and governmental form of organizations. The flatness of organsation structure has resulted in virtual absence of ‘vertical or upward movement motivation and the excessive job security associated with government job has put them beyond the operation of ‘positive and negative motivations‘. Motivation depends on several factors from physical working environment, design and content of work to relationship at work and freedom to experiment. All these factors have not been given any thought in ULGs. There is a total absence of capacity building concept; it is very common that a ULG employee retires after 30 years of service without getting single day formal training. Most of the ULGs do not have in house training facility. In simple words there is absence of concept of human resource development in most of the ULGs. Good governance has more do with mind set, attitude and culture of human element than any other thing like resources, technology etc. The underdeveloped and inappropriate human element of ULGs is considerably responsible for lack of good urban governance in India.

Decision Making Function

Underlying the processes of planning, controlling, organizing, staffing, and leading is the all-important process of decision-making. This function implies making rational choice between alternations. It involves defining the issue or situation, searching of alternative solutions, evaluation of alternatives, taking the decision and collecting feedbacks.

The legal structure of ULGs in India is such that policy-making powers are with the elected wing represented by the council and various committees made up of elected representatives, while executive powers or operational powers lie with the executive, which is represented by Municipal Commissioner. This separation of operational decisions with executive wing and policy decisions with elected wing has truncated the decision-making process and decapitated accountability for decisions made in ULGs. It has become conflict of human egos, reactive (as every body waits other wing to move first), long drawn and more importantly inconclusive. The quality of decision-making can be improved by using modern information technology but Indian ULGs have not harnessed this source. Non-existence of formal management information system is a common feature one can observe in ULGs. Good governance essentially requires quick, rational and conclusive decision-making but it is lacking in ULGs.

Finance Function

It involves the procurement of funds and their effective utilization in business. It covers financial planning, forecasting of cash receipts and disbursements, the realization and recovery of funds, allocation of funds, and utilization of funds in the best possible manner, and financial control. It deals with the three basic decisions - investment decision, financing decision, and dividend decision. These decisions are interrelated and hence, their joint impact must be taken into account. Management in this context means evolving optimal combination (mix) of these decisions to maximize the wealth of the firm.

Investment Decision - Capital budgeting, a major aspect of this decision, is the allocation of capital to investment proposals whose benefits are to be realized in future. It also includes decision to reallocate capital when an asset no longer economically justifies the capital committed to it. Efficient management of current assets, liquidity etc. also forms part of this area.

In ULGs this area of decision-making is much less than satisfactory. For example in ULGs allocation of resources (investment decision) to various activities is done in an adhoc manner. It lacks scientific project appraisal and selection procedure. As a result, resources are allocated to non-priority, non-essential or wasteful activities, while obligatory, essential works get neglected. ULGs are not only expected to attain the objective of maximizing the return but also the objectives of equity and social transformation (good urban governance). The defective functioning of the investment decision-making area has defeated this basic purpose and has drained ULGs resources through wasteful and non-priority expenditure.

Financing Decision - This is concerned with determining the best financing mix or capital structure for an organization. This involves deciding upon needs and sources of new external financing. Risk, return and control are the most crucial factors relevant in formulating the financing decision.

The financing decision area (resource augmentation) is a glaring failure of Indian ULGs. Indian ULGs have failed to optimize whatever tax resources they have. They have also failed to raise/develop non-tax resources. Similarly ULGs have failed to raise adequate loans from appropriate sources at minimum possible cost. This total failure of the financing decision-making area has left them too starved of resources to be able to go for good urban governance.

Dividend Decision - This area of decision-making includes the percentage of earnings paid to stockholders (citizens in case of governments), the stability of absolute dividends over time, stock dividends and the repurchase of stock. The value of a dividend (return) to the citizen must be balanced against the opportunity cost of the savings lost by way of tax payment to government.

The dividend decision area of the finance function is, many times, wrongly considered to be non-relevant for the ULGs. The term dividend should be understood in generic term - return. ULGs function using public money and they provide return to the people in the form of various urban services and social welfare activities. Thus the way a business enterprise strives to maximize the wealth of its shareholders, municipal bodies should also strive to maximize return or wealth to the citizens under its jurisdiction. Again this has not happen, like other governments, ULGs have provided negative rates of return to the people at large that is they have failed to provide good governance.

The finance function is an all-pervasive function and hence equally relevant for ULGs. Unfortunately since the working of its three constituent decision areas is defective, it is non-existent in all the ULGs. Other reasons for its non-existence in ULGs are described subsequently.

Absence of Scientific and Appropriate Accounting System - Accounting is recording, classifying and summarizing events & transactions in a meaningful manner and interpreting the results thereof. It is a process of identifying, measuring and communicating information to permit judgment and decision by the users of the accounts. As the accounting system is inadequate and defective, in ULGs it has becomes non-transparent not only to the outsiders but also to insiders who often happen to be decision makers, and incapable of identifying (or locating) accountability for inefficient performance. This lack of accountability and transparency is ultimately hindering good urban governance.

Inadequate Auditing - Auditing is a corollary to the accounting system. An independent, professional auditing system lends sanctity and credibility to the correctness and transparency of the accounts written. Auditing specifically serves the accountability objective as it unearths irregularities, lapses and inefficiencies and indicates persons and events accountable for them. The positive and constructive use of the auditing system ultimately helps management and stakeholders to spot and remove inefficiencies. Inadequate auditing has allowed inefficiency to perpetuate and thus indirectly hindered good urban governance.

Absence of Financial Reporting - Disclosure norms and financial reporting systems ensure presentation and dissemination of data, results of an organisation to the people at large in a transparent, comparable and user-friendly manner. An organisation may have a good accounting and auditing system but if the financial reporting system is inappropriate then it may not depict real picture of an organization’s performance. Thus it acts like a magnifying glass for the society at large, helping it to know about the efficiency with which an organisation has worked or served the society. It provides people with an information tool through which they can demand accountability for its performance. There is formal financial reporting system for ULGs; even most of the Municipal Acts are silent about it. The virtual absence of financial reporting standards and system has robbed people of an effective tool for pressing for good urban governance.

Unaugmented Budgeting System - Budgeting, in simple terms, is identifying what we want and devising ways to achieve it. Though historically it evolved as a controlling tool, today it is considered a very important management tool encompassing both planning and controlling functions. Budget in government (public institution) context is much more than tool for management. It is an instrument of socio-economic reforms. It is legal authorisation, a policy document, a financial plan, an operations guide, a communication device and basis for performance evaluation. The transparency about an organisation’s vision stems from the structure, format of its budget. The budget provides benchmarks for efficiency analysis and also provides modalities for fixing up accountability. In ULGs budgeting is a highly unaugmented, ritualistic and non-participative process. As any government gets actualized through the medium of budget, it has turned out to be biggest stumbling block in attaining good urban governance.

Controlling Function

Controlling provides a means of checking the progress of the plans and correcting any deviations that may occur along the way. Planning and controlling go hand to hand. It is difficult to conceive one without another. There can be no control without a plan and plans cannot be successfully implemented in the absence of control.

The type of control depends on factors to be measured and controlled. It is meaningful only when there is a clear-cut responsibility for activities and results. Like the other management functions, controlling is found wanting in the ULGs as follows.

Controlling requires standards for its operation and standards are established on the basis of plans. As plans are not made meticulously in ULGs it becomes difficult to set standards for performance. Having set standards it is necessary to devise a system of measuring the performance of individuals, and departments. ULGs have not developed performance indicators and they do not use any formal system to measure performance. The next aspect of controlling is correcting deviations, which depends on feedback. Feedback refers to the information about the critical control variable of the operations or activities. Usually ULGs do not have formal feedback system based on critical control variables of the activity.

The budget is a traditional and widely used control process but as noted above, it fails to work as a control devise in the ULGs. Recent years computer technology has made it possible to use sophisticated control techniques but as computerization level is still very minimal in ULGs, even this recourse is not used by ULGs for controlling.

The result of such a stark absence of controlling function is obvious. One finds cost and time overruns, lack of cost control, poor resources recovery performance etc in ULGs Not only this weak controlling remove the concept of accountability from the minds of people working in an organization. In the wake of weak controlling, it has become difficult to determine what is good urban governance for a particular ULG, how to measure it, and how far the actual performance is deviating from the standard.

The above discussion regarding the status of management function in the ULGs clearly indicates that each and every aspect of management function in ULGs is ridden with deficiencies, neglect and non-augmentation. Without strengthening it or making it efficient and effective it will not be possible to have good urban governance. Good urban governance is not something external or cosmetic, it has to spring internally from every aspect of an ULG. It needs to become integrated into the culture of an ULG. Starting single window system or holding ‘Lok Darbar at regular intervals or automated voice response system or making some information or services available on web or internet or putting up hi-fi touch screen kiosk etc do not necessarily lead to good urban governance, but is unfortunately being equated to those. These things do have relevance and role to play but they can do real quality addition to governance only if its core full of accountability, transparency and efficiency. As noted earlier management function is the basis, foundation, or ‘maintenance factor’ of good urban governance and until and unless it exists in the ULGs in an efficient, effective form, the good urban governance will remain an elusive mirage. In the next part of the paper an attempt is made to outline municipal reforms pertaining to management and financial systems to make good urban governance possible.

Part IV

Municipal Management Reforms for Good Urban Governance

The reforms enumerated in following pages pertain to the strengthening of the management function in ULGs to attain good urban governance. It is difficult to prioritise these reforms, as all of these are basic or fundamental, and have already become overdue. Ideally an ULG should adopt all of them simultaneously at a one go, but that seems impossible. An ULG striving to deliver good urban governance should select some of these reforms based on its own perception of situation, requirements, resources available and commitment. It can be observed that most of the reforms suggested are simple and mainly pertain t to attitudinal change and common sense at the institutional level. They do not require sophisticated technology, sizeable financial resources or professional support. What is most important is to get started with the reforms process (instilling willingness to reform) and to go on expanding its scope and composition as an ULG moves forward on the path of reforms. The municipal reforms for good urban governance can be enumerated as follows –

Separate Governance and Management Functions

Because of considering an ULG a miniature body politic till date, attention has been paid to its governance role only, but an ULG is a body corporate also. It is necessary to separate management function from governance function so that adequate attention can be paid to it.

Benefits of separating governance and management functions –

Some argue that there is little to be gained by separating the roles of governance and management. However it is experienced that separation of the two functions will contribute to more effective city management. The benefits of separating the two roles are hereby enlisted:

  • The political objectives and goals for the city are clearly defined (by the politicians)
  • Politicians are free to concentrate on policy and performance and can hold the City Manager accountable for effective achievement of objectives
  • The administrative goals and objectives for the city are clearly defined
  • Management of the organization is professionalized, to usher in higher standards of performance
  • Accountability is enhanced at all levels because the public knows who is responsible and for what
  • The risk of corruption and manipulation of the rules is reduced because the public knows exactly what each office bearer (political or administrative) should be doing
  • Objective policy advice can be given by the Municipal Commissioner with options and trade offs transparent
  • There will be less volatile changes in standards of service provision at times of change in political control.

Introduce Planning Function

The heading may appear surprising and trivial, but, as observed above, ULGs are devoid of a planning culture. They should introduce an appropriate planning function in each and every aspect of governance and inculcate an appropriate planning culture. For achieving good urban governance, introduction of planning function will not be sufficient, unless it is made real participative. 74th CAA has provided one way in the form of ward or circle committees. Beside this medium an ULG should explore all possible ways to involve people in its long and medium term planning process. The specific municipal reforms under this head would be –

  • Preparation of long-term vision plan for the city with the involvement of all its stakeholders. This exercise is also known as city development strategy or city corporate plan. It should be updated at a regular time intervals.
  • All the plans to be linked with each other.
  • Preparation of capital investment plan based on vision or city development strategy.
  • Preparation of financial and operational plan for implementing capital investment plan.
  • Beside such long and medium term strategy plans ULG should prepare detailed operational plans each and every important aspects of urban governance-management. For example vehicle replacement plan, manpower recruitment plan, assets maintenance plan etc.

Rationalize Organising Function

Organising is a vehicle or medium through which plans get actualized. ULGs will have to tune and tone up various apparatus of its organizing function. More specifically an ULG should undertake the following reforms -

  • Restructure and rationalize organization structure to make it logical. An ULG may choose any factor for such grouping but once it is selected there should be no mess up; only the logical structure should prevail.
  • Increase levels of management that is reduce existing flatness. This will reduce span of control and would also address the vertical motivation problem to some extent.
  • Review of jobs and responsibilities carried by different organizational positions and the authority delegated to them. On basis of such evaluation adequate delegation of authority should be carried out.
  • Establishing clear unity of command by removing overlapping jurisdictions of organizational positions. Organizational structure should evolve out of a well thought out exercise, rather than by default or accident.

Develop Human Resource

It is the human element, which ultimately carries out plans and controls by using the organization structure. It communicates with the world. Good governance is ultimately rendering satisfaction to the people at large and it refers to the mutual interaction of different human elements. Beside specific municipal reforms listed below regarding staffing function, good urban governance will really require attitudinal change or change of mindset of the people working in an ULG. For this appropriate capacity building and attitudinal transformation, efforts will have to be taken on a sustained basis, and an accountability fixing mechanism, to which even a common man can contribute to catch errant ULG employees, will have to be put in practice. The other specific municipal reforms should include -

  • Professionalised recruitment procedure. Recently Vadodara Municipal Corporation carried out its recruitment through professional agencies or two years back Government of Gujarat recruited municipal chief officers through GPSC.
  • Measures to create social credibility to municipal jobs.
  • Introduction of merit based promotion policy and creating adequate levels in management to facilitate upward mobility.
  • Infrastructure to conduct different types of training – induction, refresher, technical beside above discussed attitudinal training.
  • ULGs should improve physical and social work environment, relationships at work and culture of freedom.
  • Creation of a platform for sharing of experience, knowledge and innovations. City Managers Association, which started in Gujarat and now getting replicated in nine other states is a step in right direction. It has tried to fill the void but such efforts should be complemented further.
  • The political and more importantly executive leadership will have to become decisive and ready to shoulder responsibility. The exemplary experience of Surat, Ahmedabad, Thane and Nagpur testify to the tremendous potential of decisive and responsible leadership to gain unprecedented achievement from the very same municipal employees.

Decision-Making Function

  • The decision-making process in ULGs needs overhauling. The present legal structure separating policy making and operational or executive decision-making should undergo an urgent change. The present structure has given rise to the syndrome of authority without accountability. The Mayor-in-council format has worked successfully in some ULGs. It should be adopted widely. It will be in tune with the democratic polity we have adopted. When political executive is given full decision-making powers, they should be made equally accountable to the people for their decisions.
  • In order to bring about informed decision-making, ULGs should install sound management information systems and should make use of all means of modern information technology.
  • In order to speed up the decision-making process especially in the general council and various committees made up of elected representatives, the concept of ‘Guillotining’ should be introduced.
  • In order to make decision making transparent in ULGs, state governments should frame suitable transparency legislation binding to ULGs. For example State of Karnataka has made a beginning in this direction.
  • In order to make decision-making participative, the mechanism of ward and circle committees envisaged in 74 CAA should be put in practice in right earnest. Similar kind of other mechanism promoting peoples’ participation should be adopted by ULGs.

Finance Function

There is urgent need to install a finance function in ULGs in place of the present inadequate bookkeeping, procedural auditing, ritualistic budgeting and zero financial reporting. The investment, financing and dividend decision-making areas of finance function must be carried out in a scientific way. For this ULGs will have to undertake following reforms –

  • Adoption of modified accrual base fund accounting system. Ideally right from the beginning it should be implemented on on-line computerization basis. This reform is quite possible. More than 100 ULGs have implemented this reform. For example accounting reforms have been implemented by all ULGs of Tamil Nadu State and by individual ULGs like Vadodara, Indore, Surat, Ahmedabad, Banglore and Ludhiana etc.
  • Introduction of performance or efficiency auditing in place of conventional procedural auditing.
  • Financial reporting with adherence to accounting standards and disclosure norms in a reasonable time frame. Special efforts to disseminate financial results to the people.
  • Adoption of Participative and performance budgeting practices. For example efforts of Vadodara Municipal Corporation of Gujarat.

Controlling Function

  • Setting up of controlling network for each critical activity point, section or department or individual.
  • The plans should be prepared and expressed in such a way that they facilitate their conversion into standards for controlling.
  • Identification of suitable performance indicators for measuring performance.
  • Creation of suitable database and information system to facilitate measuring and evaluation of performance objectively.
  • The possible deviations, which may take place with the plans, should be thought out in advance and appropriate contingency plans should be kept prepared to facilitate correcting deviation efforts of controlling function.
  • Feedback essentially involve time lag, computer technology should to used to speed up feedback process so that corrective actions regarding deviations can be taken as early as possible.

Summing Up

The term ‘Good Governance’ has continuously evolved with the development of human civilization. It has acquired much broader meaning recently in the wake of globalization, economic liberalization and corporatisation.

Good Governance is a broader notion than good government. It involves governments and also civil society (citizens, civic institutions, etc). Good governance in the urban management context includes all of the laws, regulations, frameworks, management systems and processes, social and cultural surroundings in which an urban local government operates. Thus good urban governance has now more of management and social overtones than political or philosophical.

In recent years it’s the social perspective, which involves civil society in governance that has received some attention. But the management perspective has remained unattended in Indian ULGs. The management perspective (which obviously includes finance function) of good governance is much more relevant in case of an ULG than any other level of government as ULGs possess a dual character. An ULG is not only miniature body politic but it is also a body corporate.

The management function described above constitutes ‘maintenance factor’ whose presence does not bring great fortune or employee motivation but their absence brings disaster or demotivation to an organization. The absence of hard-core municipal management system reforms efforts is the root cause of weak urban governance situation in India.

Each and every aspect of management function in ULGs is riddled with the deficiencies, neglect and non-augmentation. Without strengthening it or making it efficient and effective it will not be possible to have good urban governance.

There can be several reforms to strengthen management function in the role of an ULG; it is difficult to list all of them. Some of them have been enumerated in this paper. It is also difficult to prioritise them as all them have become overdue and essential. An ULG striving to deliver good urban governance should select some of these reforms based on its own perception of situation, requirements, resources available and commitment.

Source : Dr. Ravikant Joshi, National Workshop on Municipal Reforms for Good Governance

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