Andhra Pradesh leads in urban local body reforms

Amaravati: Andhra Pradesh has taken the lead in the reforms of urban local bodies along with Madhya Pradesh, the Union Finance Ministry announced at New Delhi on Wednesday.

Accordingly, AP will enforce a new tax system. The State will notify (a) floor rates of property tax in ULBs which are in consonance with the prevailing circle rates (i.e. 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 Centre 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 per cent 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, 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 mobilize additional Rs 2,373 crore.

Reforms in the urban local bodies and the urban utilities reforms are aimed at financial strengthening of ULBs in the State and to enable them to 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 are: Andhra Pradesh has also 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 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".