Andhra, MP Take The Lead In Undertaking Urban Local Bodies Reforms, Allowed To Borrow Additional Rs 4,898 Crore

The government on Wednesday (23 December) granted permission for the additional borrowing of Rs 4,898 crore to Andhra Pradesh and Madhya Pradesh after both the states successfully undertook the urban local bodies (ULBs) 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," said an official release.

To motivate the states to undertake reforms in various citizen centric sectors, the Ministry of Finance has linked a part of additional borrowing permission granted to the states to completion of reforms.

In view of the resource requirement to meet the challenges posed by the COVID-19 pandemic, the Centre had on 17 May 2020 enhanced the borrowing limit of the states by 2 percent 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 release said.

The four citizen centric areas identified for reforms were Implementation of One Nation One Ration Card System, Ease of doing business reform, Urban Local body/ utility reforms and Power Sector reforms.

"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 4,898 crore through open market borrowings. Out of these, Andhra Pradesh has received permission of Rs 2,525 crore, while Madhya Pradesh has been permitted to mobilise additional Rs 2,373 crore," the release added.

According to the release, the reforms in the urban local bodies and the urban utilities are aimed at financial strengthening of ULBs in the state and to enable them to provide better public health and sanitation services.

Madhya Pradesh has come up with the "Madhya Pradesh Nagarpalika Vidhi (Dwitiya Sanshodhan) Adhyadesh, 2020" to implement the reforms.

Meanwhile, Andhra Pradesh has issued an ordinance to amend the Municipal corporation Act, 1995, the Andhra Pradesh Municipalities Act, 1965, the Visakhapatnam Municipal Corporation Act, 1979, the Vijayawada Munipical Corporation Act, 1981 and the Andhra Pradesh Municipal Corporations Act, 1994 to effect the reforms.

Besides additional borrowing permissions, the states completing three out of the four reforms are entitled to get additional financial assistance under the “Scheme for Financial Assistance to States for Capital Expenditure”.