Urban local bodies in the state are governed by two important legislations viz., Hyderabad Municipal Corporation Act 1955 and the Andhra Pradesh Municipalities Act 1965. The former Act extends to all the 14 municipal corporations in the city and the latter applies to all the municipalities. The Acts specify the governance framework, the spatial jurisdiction and the functional domain of the local bodies.

• Urban Planning including Town Planning
• Regulation of land use and construction of buildings
• Roads and bridges
• Water supply for domestic, industrial and commercial purposes
• Public health, sanitation, conservancy and solid waste management
• Slum improvement and upgradation
• Provision of urban amenities and facilities such as parks, gardens, play grounds
• Burials and burial ground; cremations, cremation grounds and electric crematoriums
• Cattle ponds; prevention of cruelty to animals
• Vital statistics including registration of births and death
• Public amenities including street lighting, parking lots, bus stops and public conveniences.
• Regulation of slaughter houses and tanneries

In 2004 the Government after a review of functions of urban local bodies, transferred five more functions to the urban local bodies through government orders. They are:

• Planning for economic and social development
• Urban forestry, protection of the environment and promotion of ecological aspects
• Urban Poverty alleviation
• Safeguarding the interest of weaker sections including the handicapped and mentally retarded
• Promotion of cultural and aesthetic aspects.

The Government decided that the remaining function i.e. Fire Services should remain with the state government and will be transferred after a review later. Though the five functions were transferred, they have no statutory basis. There are several issues in the transfer of functions of state agencies to the local bodies. Transfer of functions need follow up legislation, institutional capacity of the local bodies, financial resources, etc., which come in the way of transfer of these functions to the urban local bodies. It is also expected that the transfer of functions will be followed by transfer of officials as well as resources. However, transfer has not happened in the state thereby leaving the transferred functions only on paper.

• Spatial and functional fragmentation
• Overlapping functions
• Multiple accountability lines
• High service delivery gaps, and
• Increasing urban poverty

These and other key challenges are discussed below.

Lack of Clarity in Local Functions
        The Constitution (74th Amendment) Act, 1992 envisages that the functions listed in the 12th schedule be entrusted to elected municipalities. This is with a view to minimize ambiguities and overlapping of functions between local bodies and other authorities. However, in practice, several agencies are responsible for the functions and in some cases, local bodies have no role.

Inter-Institutional Conflicts
       Inter-jurisdictional and inter-institutional conflicts between public service planners and providers are common in metropolitan administration. District heads of departments, heads of parastatals and elected and non-elected officials of local bodies are required to coordinate their works on a day-to-day basis. The large number of departments, institutions, local authorities, agencies and officers undertaking similar, related or over-lapping functions or functions that are not clearly defined lead to conflicts in operation. Moreover, the various agencies operate over the same or overlapping jurisdictions and are not in a position to fully understand or evaluate the backward and forward linkages associated with these functions. Inter-institutional externalities, which occur abundantly in metropolitan economies, account for most problems of metropolitan management. They call for effective coordination and mitigation mechanisms to be put in place.

Inter-Municipal Coordination
       Hyderabad Urban Agglomeration has Hyderabad Municipal Corporation and the twelve municipalities surrounding it. The Municipal Corporation and Municipalities are separate legal entities having their own management structures. The Municipal Corporation of Hyderabad has a system of elected Mayor but without executive power. In municipalities, the chairpersons have certain executive powers. Each municipal authority has its own independent administration. There is no formal mechanism to ensure that the largest city, i.e. Hyderabad and smaller municipalities work on a common plan of action to ensure that metropolitan area is developed in an integrated manner.

Municipal-Parastatal Coordination
       There is a lack of coordination between urban local bodies and parastatals in areas such as inter-municipal, inter-district and inter-state roads, inter-municipal storm drainage and sewerage, common amenities like wholesale markets, truck terminals, bus stations, garbage dumping yards, landfill sites etc. The Hyderabad Urban Development Authority takes care of a part of coordinated planning. It prepared a master plan for the Hyderabad Development Area covering all the metro municipal authorities and 125 rural local bodies. The plan provides for common infrastructure systems and amenities, which transcend municipal boundaries. However, the real problem is noticed in plan implementation. There is no clearly defined institutional mechanism to ensure that all roads, which pass through more than one municipality, are developed as per a common road development framework. Similarly there is no mechanism to ensure that storm water drains for the metropolitan area is developed in an integrated manner taking into account geographical factors and the existing and proposed built up patterns. There is also no mechanism to project and ensure infrastructure provision based on built up analysis from time to time. This results in conflict between local bodies and HUDA. The Metropolitan Planning Committee envisaged under the 74th Amendment Act, 1992 has not yet been constituted for Hyderabad

Managerial Coordination Issues
       As discussed earlier, the Hyderabad Metropolitan Area has a strong presence of the State Government Departments and several parastatals, Central Government agencies including Secunderabad Cantonment Board, Airport Authority of India, South Central Railways, Archaeological Survey of India, urban and rural local bodies and a strong presence of civil society organizations. Thus, there are many managers connected with metropolitan service delivery and infrastructure and management. All these make the task of metropolitan management highly complex and difficult. In addition to general coordination between urban and rural local authorities, there are several inter-departmental and inter-institutional coordination issues, which arise, in day-to-day administration of the metropolitan area.

Jurisdictional Issues
       While subsidiarity is a desirable principle that can be adopted as a guide to draw boundaries for various metropolitan functions, it is not possible to arrive at a common boundary for all services. The geographical area required to internalize the costs and benefits of a service like urban planning may not be the same for another service like urban transport or water supply or storm drainage. However, a large enough an area would be in a position to internalize most of the dimensions of key local services. The whole idea is to contain the spill over externalities so that the benefit districts match the revenue districts. If such matching is not ensured there will be perennial problems of service revenues falling short of service costs, mounting interinstitutional conflicts, increased cost of public administration, lack of integrated development and imposition of high social costs on the public. Thus, it is important that jurisdictional issues are sorted out carefully. While keeping the costs of metropolitan administration low, exploitation of the development potential of the metro area and its contribution to national wealth and income should be the primary consideration for metropolitan spatial organization.

Grievance Redressal
       The grievance redressal mechanisms in the city are weak and the people are made to run from pillar to post for grievance redressal. There is also no proper platform to provide information to the citizen on all services. Lack of awareness and information is affecting the citizen's access to grievance redressal. Though citizen charters were established for the service providing agencies, majority of the public is not aware of the duties and rights under the same. There is a need to address these institutional and other challenges to provide good governance to the city. Unless the roadblocks are removed, economic development is hampered and efficient service delivery becomes difficult. This adversely impacts the community - particularly the poor. There is need, therefore, to restructure the governance framework, remove the roadblocks and streamline the lines of accountability. The governance reforms become all the more critical in the context of Hyderabad becoming more competitive and investment destination. The city should offer high quality services and promote inclusiveness and citizen friendly governance institutions. Only where it is environment friendly and is well governed the vision of the city can be realized. The institutional strategies required include:

• Spatial integration of MCH and surrounding municipalities for better planning and delivery of services.
• Establishing clear lines of accountability of all service delivery agencies, and
• Constituting autonomous service delivery agencies in different sectors like water and sanitation, transport, roads, solid waste management etc.
• Performance based memorandum of understanding between the corporation and various service delivery agencies focusing on targets and outcomes.

This proposed governance arrangements are shown in the figure 3.5: Within this overall framework institutional and implementation mechanisms need to be worked out. They include

• Establishing a Reform Monitoring Unit as a oversight body to monitor the reforms underway and being proposed;
• Strengthening local government capacities by outsourcing the project management and M&E functions;
• Establishing appraisal institutions and processes;

The institutional and governance reform strategies include;

• Strengthening decentralization - 74th CAA
• Evolving inclusive governance mechanisms
• Institutional integration
• Evolving partnerships for service delivery

Establishing coordination mechanisms to overcome spatial and functional fragmentation