Goa becomes the 6th State to complete Urban Local Bodies (ULB) reforms

Gets additional borrowing permission of ₹ 223 crore

Additional borrowing permission of ₹ 10,435 crore granted so far to 6 States for undertaking ULB reforms

Goa has become the 6^th State in the country to successfully undertake Urban Local Bodies (ULB) reforms stipulated by the Department of Expenditure, Ministry of Finance. Thus, the State has become eligible to mobilise additional financial resources of ₹ 223 crore through Open Market Borrowings. Permission for the same was issued by the Department of Expenditure.

Goa has joined five other States namely, Andhra Pradesh, Madhya Pradesh, Manipur, Rajasthan and Telangana, who have completed ULB reforms. On completion of this set of reforms, these five States have been granted a total additional borrowing permission of ₹ 10,435 crore. State wise amount of the additional borrowing permitted is as under:

Sl.No.	State	Amount (Rs in crore)
1.	Andhra Pradesh	2,525
2.	Goa	223
3.	Madhya Pradesh	2,373
4.	Manipur	75
5.	Rajasthan	2,731
6.	Telangana	2,508

Reforms in ULBs and the urban utilities reforms are aimed at financial strenghtening of ULBs in the States and to enable them to provide better public health and sanitation services to citizens. Economically rejuvenated ULBs will also be able to create good civic infrastructure.

The set of reforms stipulated by the Department of Expenditure to achieve these objectives are:

(i)    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.

(ii)   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 multiple challenges posed by the COVID-19 pandemic, the Government of India had on 17^th May, 2020 enhanced the borrowing limit of the States by 2 percent of their GSDP. Half of this special dispensation i.e. 1 percent of GSDP was linked to undertaking citizen centric reforms by the States. The four citizen centric areas for reforms identified by the Department of Expenditure were

(a) Implementation of One Nation One Ration Card System,

(b) Ease of doing business reform,

(c) Urban Local body/ utility reforms and

(d) Power Sector reforms.

Till now, 17 States have carried out at least one of the four stipulated reforms and have been granted reform linked borrowing permissions. Out of these, 13 States have implemented the one nation one ration card system, 12 States have done ease of doing business reforms, 6 States have done local body reforms and 2 States have undertaken power sector reforms. Total reform linked additional borrowing permission issued so far to the States stands at Rs.­­­ 76,512 crore.

Urban Local Bodies reform enables additional state borrowing permission after prescribed property tax and user charge measures. Goa completed Urban Local Bodies reforms and became eligible to mobilise additional borrowings of Rs. 223 crore through open market borrowings. The reforms require the State to notify floor rates of property tax consonant with prevailing circle rates and floor rates of user charges for water supply, drainage and sewerage reflecting current costs and past inflation, and to put in place a system of periodic increases in those floor rates and user charges.