By TIOL News Service

NEW DELHI, DEC 23, 2020: THE Finance Ministry today said Andhra Pradesh and Madhya Pradesh have been permitted to borrow an additional Rs 4,898 crore after taking the lead in undertaking the Urban Local Bodies (ULB) reforms.

The two states have successfully completed the set of reforms in functioning of ULBs, as specified by the Department of Expenditure, Ministry of Finance.

The reforms are aimed at financial strengthening of ULBs in the states and to enable them to provide better public health and sanitation services, and also to create good civic infrastructure.

To effect the reforms, the Madhya Pradesh Nagarpalika Vidhi (Dwitiya Sanshodhan) Adhyadesh, 2020 was implemented in Madhya Pradesh, while Andhra Pradesh issued an ordinance to amend the Municipal Corporation Act, 1995, the Andhra Pradesh Municipalities Act, 1965, the Visakhapatnam Municipal Corporation Act, 1979, the Vijayawada Municipal Corporation Act, 1981 and the Andhra Pradesh Municipal Corporations Act, 1994.

Both states have put in place a system of periodic increase in floor rates of property tax and user charges in line with price increases. They will also notify floor rates of property tax in consonance with the prevailing circle rates, and the floor rates of user charges in respect of the provision of water-supply, drainage and sewerage which reflect current costs and past inflation.

The government had in May decided to link a part of additional borrowing permission granted to the states who were undertaking reforms in various citizen-centric sectors to meet the challenges posed by the pandemic.

However, states were required to complete reforms in four fields - implementing the 'One Nation, One Ration Card' system, ease of doing business reforms, urban local body/utility reforms and power sector reforms - by 15 February to access funds available to them after their borrowing limits were enhanced by 2% of their Gross State Domestic Product (GSDP).

States would also get the facility of additional funds equivalent to 0.25% of their GSDP on completion of each reform.

On successfully undertaking the ULBs reforms, Andhra Pradesh and Madhya Pradesh have been granted permission to mobilise additional financial resources to the tune of Rs 2,525 crore and Rs 2,373 crore respectively.

“Besides the ULBs reforms undertaken by Andhra Pradesh and Madhya Pradesh, 10 states have implemented the One Nation One Ration Card System and six States have done the ease of doing business reforms, so far,” the ministry said.