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Centre grants Rs 4,898 crore of reform-linked additional borrowing limit to Andhra and MP


The Centre granted an additional borrowing limit of Rs 4,898 crore to Andhra Pradesh (AP) and Madhya Pradesh (MP) for the implementation of urban local body (ULB) reforms, on Wednesday.

While AP received permission to mobilise Rs 2,525 crore through market borrowings, MP can raise an additional Rs 2,373 crore, according to a finance ministry statement.

The move was part of the reform-linked additional borrowing of 2% of gross state domestic product for pandemic-related expenditures, provided by the Centre as part of the Atmanirbhar Bharat package announced in May.

States implementing the ULB reforms, aimed at financially strengthening ULBs to enable them to provide better public health and sanitation services, would get additional borrowing limits of 0.25% of GSDP.

The objectives for the ULB reforms call for the states to notify floor rates of property tax in ULBs which are in consonance with the prevailing circle rates or the guideline rates for property transactions.

States are also required to notify floor rates of user charges in respect of the provision of water supply, drainage and sewerage which reflect current costs and inflation along with putting in place a system of periodic increase in floor rates of property tax and user charges in line with price increases.

MP came up with the Madhya Pradesh Nagarpalik Vidhi (Dwitiya Sanshodhan) Adhyadesh, 2020 to implement the reforms, the ministry said.

Similarly, AP 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, the statement said.

The other sectors which are each linked to an additional borrowing of 0.25% of GSDP include the One Nation One Ration Card System, ease of doing business and the power sector.

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