State successfully implements urban local body reform


Government gets approval for mobilising additional open market borrowings of ₹2,508 crore

The State has secured approval to mobilise additional financial resources to the tune of ₹2,508 crore through open market borrowings.

The Department of Expenditure of the Union Finance Ministry accorded approval after the State successfully implemented the urban local body reform as stipulated by the Centre. The reforms included notification of floor rates of property tax in the ULBs in consonance with the prevailing circle rates as also notify floor rates of user charges in respect of the provision of water supply, drainage and sewerage reflecting current costs/past inflation.

In addition, the State had agreed to put in place a system of periodic increase in floor rates of property tax/user charges in line with price increases.

Third State

By implementing the reforms, Telangana became the third State after Andhra Pradesh and Madhya Pradesh to implement the urban local body reform. In the process, the State had become eligible for additional borrowing of ₹7,406 crore.

The Central government, in May last year, enhanced the borrowing limit of the States by 2% of their Gross State Domestic Product. Half of the special dispensation was linked to undertaking reforms in four key areas. These are implementation of one nation one ration card, ease of doing business (EODB), urban local bodies reforms and power sector reforms. The State was the first in implementing one nation one ration card system while it competes with neighbouring AP and Uttar Pradesh in EODB parameters. It has now joined the ranks of AP and MP in ULB reforms.

Privatisation

Doubts however persist on the implementation of the reform suggested in the power sector as it would entail privatisation of the distribution companies. The State voiced its concern over the proposed reforms as it would have an adverse impact on the agriculture sector for which the government is providing power free of cost on 24×7 basis.

Implementation of the last reform would enable the State to get permission for mobilising another ₹2,500 crore (0.25% of GSDP) through open market borrowings, but it would depend on whether the State opts for reforms in the power sector as suggested by the Centre in the coming days.

According to the Union Finance Ministry, 10 States implemented one nation one ration card so far and seven put in place EODB norms. The total additional borrowing permission issued to these States which implemented reforms was ₹54,190 crore.

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