The latest central budget has two significant initiatives aimed at promoting urban development. Essentially, the effort is being made to reform urban sector by removing legal and procedural impediments as well as revising legal framework and financing methods. Moreover, recognizing the urban areas as engines of growth, while creating better living environment in them, is a welcome change in the government's outlook to this sector. The Finance Minister, in an attempt to give a boost to urban sector, made two important provisions in his latest budget:
* First, it is proposed to set up an Urban Reform Incentive Fund (URIF) with an initial allocation of Rs. 500 crores to provide reform-linked assistance to States. The fund will seek to incentivise reforms in the following areas:
* reform of rent control laws and repeal of Urban Land Ceiling Acts;
* rationalization of high stamp duty regimes;
* revision of bye-laws to streamline the approval process for construction of buildings, development of sites, etc.;
* revision of municipal laws in line with model legislation prepared by the Ministry of Urban Development and Poverty Alleviation;
* simplification of legal and procedural frameworks for conversion of agricultural land for non-agricultural purposes; and,
* initiation of public-private partnerships.
* Second, it also proposed to create a City Challenge Fund (CCF). Once again, this will be an incentive based facility to support cities to fund the transitional costs of building up sustainable and credit worthy institutional systems of municipal management and service delivery. It will provide partial financial assistance to promote economic reform and financially viable projects to be undertaken by urban local bodies. Further, it is proposed to set up a Pooled Finance Development Scheme to enhance credit worthiness of local bodies to access market borrowing. To provide further incentives for urban local bodies to become creditworthy and to invest in urban infrastructure provision, the budget has proposed to raise the limit for tax-free bonds up to Rs 500 crores in 2002-03 up from Rs 200 crores last year. This will enable the municipal corporation to augment their resources preferably for developmental purpose.
Surely, the budget offers an opportunity to local government bodies of cities like Mumbai to undertake reforms in urban development sector as well as improve the financial positions and service delivery.
Compiled by
Ramakrishna Nallathiga