Sinha sets up Urban Reform Incentive Fund

To provide reform linked assistance to States to improve the lot of the urban population

Union Finance Minister Yashwant Sinha , in the Union Budget for 2002-03 presented to Parliament on Thursday, said the 2001 census shows that the urban population in India is now about 285 million, greater than the total population of the United States.

The number of cities with more than one million population has increased from 23 in 1991 to 35 in 2001. Sinha has proposed to set up an Urban Reform Incentive Fund (URIF) with an initial allocation of Rs 500 crore 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.
• Rationalisation of high stamp duty regimes.
• Revision of bye-laws to streamline the approvals 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-agriculture purposes.
• Levy of realistic user charges and resource mobilization by urban local bodies.
• Initiation of public private partnership in the provision of civic services.
• A City Challenge Fund (CCF) will also be set up as an incentive based facility that will support cities to fund transitional costs of moving towards sustainable and creditworthy institutional systems of municipal management and service delivery. It will assist in the partial financing of the cost of developing an economic reform programme and financially viable projects to be undertaken by urban local bodies.

It is also proposed to set up a Pooled Finance Development Scheme to provide credit enhancement to assist local bodies to access market borrowing on a creditworthy basis. To provide a further incentive for urban local bodies to become credit worthy and to invest in urban infrastructure Sinha will be providing for the issue of municipal tax free bonds upto Rs 500 crore in 2002-03, up from Rs 200 crore this year.

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