Content with easily gained grants from Union and State governments, Urban Local Bodies (ULB), in sheer indifference to the crumbling urban infrastructure, are making no effort to raise funds towards renovating urban facilities. Reforms, financial or otherwise are nowhere in sight, despite the fact that their own sources of revenue, including property tax, user charges, rentals from municipal properties in the form of rent from shops and hoardings, parking charges, etc, are strictly limited and provide just enough funds for regular work.

The Centre has been encouraging ULBs to do the credit rating and issue municipal bonds, and also implement reforms in user charge collection apart from property tax collection. 

Ministry of Housing and Urban Affairs (MoHUA) data presented to the Lok Sabha this month shows that not many ULBs have responded to the Centre’s encouragement to go for credit rating, municipal bonds and property tax reforms. 

The Ministry has incentivised 10 cities that issued municipal bonds and ₹13 crore have been earmarked as incentive for issuing of bonds worth ₹100 crore, subject to a maximum incentive of ₹26 crore per city. As per the Ministry data, 470 cities have completed their credit rating and 164 cities have got investment-grade ratings while only 10 cities have issued municipal bonds worth ₹3,840 crore, and ₹226.84 crore have been released as incentives.

Under Atmanirbhar Bharat Abhiyaan, the Centre has allowed States additional borrowing for 2020-21 of two per cent of Gross State Domestic Product (GSDP). About 0.25 per cent of this additional borrowing was linked to reforms in property tax and user charges for water, sewerage and drainage. Accordingly, only 11 States have undertaken these reforms and qualified for 0.25 per cent additional borrowing. 

Property tax and popular politics 

For being eligible for 15th Finance Commission grants for ULBs for the year 2022-23, States are mandated to notify floor rates of property tax, and for the following years, demonstrate increase in property tax collections equivalent to the simple average growth rate of the State’s own GSDP in the most recent five years. 

Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 and Swachh Bharat Mission (SBM) (Urban) 2.0 launched in October 2021 mandate property tax and user charges reforms. About 500 AMRUT cities where water supply coverage has improved substantially, are mandated to submit a roadmap for achieving 90 per cent billing and collection. 

“However, elected members in ULBs are busy playing popular politics by not increasing property tax and user charges. Even as the municipal administration proposes a hike in property taxes and user charges, elected bodies are unwilling to approve the proposals, especially ahead of civic elections” said one of the senior IAS officials. 

Urban sprawls    

There are close to 4,800 cities and towns in India, with around 40 crore inhabitants. At the current rate of growth, urban population in India is estimated to reach 60 crore by 2030. It is projected that more than 50 per cent of the country’s population will be urban by 2050. 

However, cities and towns are still struggling to put basic infrastructure in place. This is visible in schemes executed by the Centre . Atal Mission for Rejuvenation and Urban Transformation 2.0 (AMRUT 2.0), Smart Cities Mission, Swachh Bharat Mission-Urban 2.0 (SBM-U 2.0), and Pradhan Mantri Awas Yojana Urban (PMAY-U) are some of the major schemes which are being executed. The ULBs have utilised funds under these schemes to set up and strengthen the crumbling infrastructure. 

Cities selected for Smart City Mission are busy using the funds to fix the problems like water supply, sewage, transport which are basic needs of any city. AMRUT is also focused on these basic needs. 

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