Telangana: 3rd State to Implement ULB Reforms

Telangana has got approval from the government for mobilizing the additional financial resources of Rs 2,508 crore through open market borrowings.

Key Points

  • The approval has been provided by the Union Finance Ministry’s Department of Expenditure after Telangana successfully implemented the urban local body reform set forth by the Centre.
  • The reforms comprised of the notifying floor rates of property tax in the ULBs in accordance with the existing circle rates and also informing floor rates of user charges in respect of the provision of drainage, water supply, and sewerage reflecting present costs.
  • Along with this, the State had agreed to adopt a system of periodic increase in floor rates of property tax/user charges as per with price increases.
  • Telangana has become the third state to implement the urban local body reforms after Madhya Pradesh and Andhra Pradesh.
  • In this process, Telangana had also become eligible for extra borrowing of Rs 7,406 crore.

In May 2020, the central government has increased the borrowing limit of the States by 2% of its Gross State Domestic Product. Half of this special dispensation was linked to reforms undertaken by the states in 4 key areas. The four areas are ease of doing business (EODB), implementation of one nation one ration card, power sector reforms, and urban local body reforms. Telangana was the first state that implemented one nation one ration card system.