New Delhi, Jan 7 (IANS): Telangana has become the third state in the country to successfully undertake 'Urban Local Bodies' (ULB) reforms stipulated by the Union Finance Ministry, making the state eligible to mobilise additional financial resources of Rs 2,508 crore through Open Market Borrowings.

With this, Telangana has now joined the two other states - Andhra Pradesh and Madhya Pradesh - who have completed these reforms. On completion of urban local bodies' reforms, these three states have been granted additional borrowing permission of Rs 7,406 crore.

The permission for additional borrowing by Telangana was extended by the department of expenditure on Thursday.

Reforms in the urban local bodies and the urban utilities reforms are aimed at financial strengthening of ULBs in the states and to enable them to provide better public health and sanitation services.

Economically rejuvenated ULBs will also be able to create good civic infrastructure, a finance ministry statement said.

As per the terms of the reforms, the state will notify floor rates of property tax in ULBs which are in consonance with the prevailing circle rates (i.e. guideline rates for property transactions), and floor rates of user charges in respect of the provision of water supply, drainage and sewerage which reflect current costs/ past inflation.

The state is also required to 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 the challenges posed by the COVID-19 pandemic, the government of India had on May 17, 2020 enhanced the borrowing limit of the states by 2 per cent of their Gross State 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.

So far, 10 states have implemented the One Nation One Ration Card System, 7 states have completed ease of doing business reforms, and 3 states have done local body reforms. Total additional borrowing permission issued so far to the states who have done the reforms stands at Rs 54,190 crore.