Hyderabad: Telangana became only the third State in the country to successfully complete ULB reforms stipulated by the Department of Expenditure, Union Ministry of Finance.
Subsequently, the State is now eligible to mobilise additional financial resources of Rs.2,508 crore through Open Market Borrowings, and the Department of Expenditure has accorded permission to the State for additional borrowings on Thursday. The other two States that completed the ULB reforms are Andhra Pradesh and Madhya Pradesh.
The combined additional borrowings granted to these three States amount to Rs.7,406 crore, an official release said. Reforms in ULBs and urban utilities are aimed at strengthening them financially in the State and to enable them provide better public health and sanitation services. Economically rejuvenated ULBs will also be able to create good civic infrastructure.
The reforms stipulated to achieve these objectives include notification of floor rates of property tax in ULBs which are in consonance with the prevailing circle rates i.e. guideline rates for property transactions and floor rates of user charges in respect of provision of water supply, drainage and sewerage which reflect current costs and past inflation.
The State have to 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 Covid-19, the Central government had, on May 17, 2020, enhanced the borrowing limits of the States by two 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 release said.
The States get permissions to raise additional funds equivalent to 0.25 percent of the GSDP on completion of reforms in each sector. The four citizen-centric areas identified for reforms are implementation of ‘one nation, one ration card’ system, Ease of Doing Business (EoDB), ULB/utility reforms and power sector reforms.
So far, 10 States have implemented the ‘one nation, one ration card’ system, seven have completed EoDB and three States have done local bodies reforms. The total additional borrowings permission issued so far to the States that have implemented the reforms is Rs.54,190 crore.