NEW DELHI: After Andhra Pradesh and Madhya Pradesh, Telengana has become the third state to complete urban local bodies reforms stipulated by the Union finance ministry.
With the completion of the reforms, the ministry has allowed the state to make additional borrowing of Rs 2,508 crore.
The permission for mobilising additional financial resources of Rs 2,508 crore through Open Market Borrowings was issued by Department of Expenditure under Ministry of Finance on Thursday.
On completion of the urban local body reforms, the three states have been granted additional borrowing permission of Rs 7,406 crore, the ministry said in a statement.
Reforms in the urban local bodies and the urban utilities reforms are aimed at financial strenghtening of ULBs (Urban Local Bodies) in a state and to enable them to provide better public health and sanitation services. Also, economically-rejuvenated ULBs will be able to create good civic infrastructure, it said.
The reforms stipulated include the state concerned notifying floor rates of property tax in ULBs which are in consonance with the prevailing circle rates, and floor rates of user charges in respect of the provision of water-supply, drainage and sewerage that reflect current costs or past inflation.
In view of the resource requirement to meet the challenges posed by the COVID-19 pandemic, the Union government on May 17, 2020 enhanced the borrowing limit of 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 statement said, adding that 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 implementation of One Nation One Ration Card System, ease of doing business reform, ULB/utility reforms and power sector reforms, it said.
So far, 10 states have implemented the One Nation One Ration Card System, 7 states have done ease of doing business reforms, and 3 states have done local body reforms.
Total additional borrowing permission issued so far to the states that have done the refoms stands at Rs 54,190 crore, as per the statement.
Source: Press Trust of India
