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Telangana has become the 3rd State to successfully undertake “Urban Local Bodies (ULB)” reform stipulated by the Department of Expenditure, Ministry of Finance.
The State has become eligible to mobilise additional financial resources of ₹2,508 crore through Open Market Borrowings with the Expenditure Department granting permission today.
Andhra Pradesh and Madhya Pradesh, are the two other State that have completed this reformThese three States have been granted additional borrowing permission of ₹7,406 crore, according to a statement from the Ministry of Finance.
Reforms in the urban local bodies and the urban utilities are aimed at financial strengthening ULBs and enable them to provide better public health and sanitation services and create civic infrastructure.
The reforms include: the State will notify (a) floor rates of property tax in ULBs which are in consonance with the prevailing circle rates (guideline rates for property transactions) and (b) floor rates of user charges in respect of the provision of water-supply, drainage and sewerage which reflect current costs/ past inflation. The State will put in place a system of periodic increase in floor rates of property tax/user charges in line with price increases.
In view of the resource requirement to meet the challenges posed by the Covid-19 pandemic, the Government of India had on May 17, 2020 enhanced the borrowing limit of the States by 2 per cent of their Gross States Domestic Product (GSDP). Half of this special dispensation was linked to undertaking citizen centric reforms by the States.
The States get permission to raise additional funds equivalent to 0.25 percent of GSDP on completion of reforms in each sector. The four citizen centric areas identified for reforms were (a) Implementation of One Nation One Ration Card System, (b) Ease of doing business reform, (c) Urban Local body/ utility reforms and (d) Power Sector reforms.
So far 10 States have implemented the One Nation One Ration Card System, seven have done ease of doing business reforms, and three have done local body reforms. Total additional borrowing permission issued stands at ₹54,190 crore.
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