Centre allows Andhra Pradesh, Madhya Pradesh to borrow Rs 4,898 crore extra post ULB reforms

The Centre has permitted two states -- Andhra Pradesh and Madhya Pradesh -- to borrow additional financial resources to the tune of Rs 4,898 crore following reforms in urban local bodies (ULBs), the Finance Ministry said on Wednesday.

The two states have successfully completed the set of reforms required in the functioning of ULBs, as specified by the Department of Expenditure.

"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," the Ministry said in a statement.

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.

The Centre had in May 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.

Besides the ULBs reforms undertaken by Andhra Pradesh and Madhya Pradesh, 10 states have implemented the One Nation One Ration Card system and six states have made the ease of doing business reforms, so far, the Ministry added.