Urban Reforms Incentive Fund

^T^{he Government approved the scheme of Urban Reforms Incentive Fund on
28.6.2003 to provide urban
reform linked assistance to States/Union Territories with an outlay of Rs. 500
crores per annum during the 10th Plan.
The fund under the scheme will be released to the States/Union
Territories as additional central assistance.
Allocation of funds to each State/UT is based on the percentage of its
urban population to the urban population of the country.}

^{2.
During the year 2003-04, reforms in the following areas were approved
by the Government, weightage
for each reform is also
indicated:-}

^{(1) Repeal of the Urban Land Ceiling and Regulation Act at the State level
by Resolution. - 10% of State’s
Share out of URIF}

^{(2) Rationalisation of Stamp Duty, in phases, to bring it down to no more
than 5% by the end of the Tenth
Plan period. - 20% of State’s Share out of URIF}

^{(3)
Reform of Rent Control Laws
to remove rent control so as to stimulate private investment in rental
housing. - 20% of State’s Share out of URIF}

^{(4)
Introduction of computerized
process of registration. - 10% of State’s Share out of URIF}

^{(5)
Reform of Property Tax so
that it may become a major source of revenue of urban local bodies, and
arrangements for its effective implementation so that collection efficiency
reaches, at least 85%, by
the end of 10th Plan period. - 10% of State’s Share out of URIF}

^{(6)
Levy of reasonable user
charges by Urban Local Bodies, with the objective that full cost of O & M
(Operation & Maintenance) is collected by the end of the Tenth Plan
period. - 20% of State’s Share out of URIF}

^{(7) Introduction of double entry system of
accounting in Urban Local Bodies.- 10% of State’s Share out of URIF}

^{3.
Funds under the URIF for the financial year 2003-2004 were released in
two installments. 50% of the eligible amount was released after signing of
Memorandum of Agreement (MoA) between the State Government/UT and the
Government of India which indicated the reforms the State/UT would like to
carry out. The second installment
was released after progress under each reform were assessed by the Empowered
Committee in terms of the milestones indicated in the MOA for each reform
area. The funds are released by
the Ministry of Finance, Department of Expenditure on the recommendation of
this Ministry. An Empowered
Committee has been set up to assess the progress made by the States/UTs
and also to decide future
generation reforms, milestones to be achieved and weightage to be given
to each reform. The composition
of the Committee is as under:-}

^{i) Secretary(Department of UEPA)}	^Chairman
^{ii) Secretary(Department of Expenditure)}	^{Member or his representative not below the rank of Joint Secretary.}
^{iii) Secretary(Planning Commission)}	^{Member or his representative not below the rank of Joint Secretary.}
^{iv) Joint Secretary(UD), Department of UD}	^Member
^{v) Joint Secretary(Housing)}	^{Member Secretary}

^{4.
During the year 2003-2004, MoAs were signed between Government of India
and 24 States/Union Territories. Funds
to the tune of Rs. 188.14 crores were recommended for release towards first
instalmment and Rs. 47.65 cores towards second installment after assessment of
the progress was made by the Empowered Committee against milestones set for
the first year.}

^{5.
During the year 2004-2005, second generation reforms and weightage to
be given to each reform is now to
be decided. The Empowered Committee has been authorised by the Government
to take a decision in this regard. .
Some of the possible reform areas could be as follows:-}

^{(i)
Revision of bye-laws to streamline the approval process for
construction of buildings, development of sites, etc.}

^{(ii)
Revision of municipal laws in line with model legislation prepared by
the Ministry of Urban Development and Poverty Alleviation.}

^{(iii)
Simplification of legal and procedural frameworks for conversion of
agricultural land for non-agriculture purposes.}

^{(iv)
Initiation of public private partnership in the provision of civic
services.}

^{(v)
Reduction in staff strength and revenue expenditure of ULBs.}

^{(vi)
Introduction of property title certification systems.}

^{(vii)
Introduction of independent regulators for urban services.}

^{(viii)
Implementation of all decentralized measures as envisaged in the 74th
Constitutional Amendment.}

^{(ix)
Implementation of Urban Street Vendor Policy by the States.}

^{(x)
Adoption of Vulnerability Atlas of India and establishment of a techno-legal regime in the building bye-laws & Development Control Rules
etc. for earthquake disaster mitigation.}

^{(xi)
Removal and further prevention of encroachment of Govt. land
(measurable parameter area encroached ) and policing of such lands.}

^{(xii)
Reduction in number of slums.}

^{(xiii)
Incentivising State Governments to make at least 20%-25% of their
developed lands in the Housing colonies ( plots / flats ) developed by Housing
Boards and Development Authorities to be reserved for EWS/LIG.}

^{(xiv)
To amend bye-laws to make Rain Water Harvesting mandatory in Housing
Socities / Colonies whether developed by private developers or by Government
agencies for which detailed guidelines to be given by Municipal Authorities /
Development Authorities.}

^{6.
The Empowered Committee, in its meeting held on 17.03.2004, had
observed that while taking a decision regarding second generation reforms,
various reforms areas may be categorized as (a) Compulsory (b) Optional.}

^{7.
All the compulsory reforms (with year-wise milestones to be laid out in
MOA must be carried out by the States in order to become eligible for he
incentive for the compulsory reforms. This could relate to reform areas aimed
at (a) good urban governance (b) self-sufficiency, viability &
sustainability (c) measures which will actively promote viable housing,
habitat, poverty & alleviation, urban infrastructure projects, reduction
in slums, reduction in encroachments, lead to urban
renewal/rejuvenation and implementation of best practices.
The compulsory reforms may carry higher weightage, say 70% (must be all
compulsorily carried out) and optional reforms weightage may be to the
extent of 30%. There can be say 6
optional reforms with 5% weightage each with milestones identified against
each of the 6 reform areas.}

^{8.
In this connection, views/comments and suggestions are being solicited
from State Governments and various Central Govt. functionaries mainly on the
following aspects:-}

^{(i)
Reforms areas which may be categorized as compulsory and total
weightage to be given to compulsory reforms (All these reforms would
have to be implemented without which no incentive funds meant against
compulsory reforms would be released).}

^{(ii)
Reform areas which may be categorized as optional with weightage to
each reform. These could be implemented at option of the States and claim the
corresponding incentive.}

^{(iii)
The proposed milestones to be achieved in 2004-2005, 2005-2006 and
2006-2007 by the State Government against each reform area giving details.}

^{(iv)
The documents (separately for each reform area) which may be required
from the State Government in support of proof of achieving each milestones
under each reform area.}

^{(v)
The manner in which the funds to the States/Union Territories for the
first year may be released, for example, what percentage of the total amount
may be released on signing of agreement and in what manner the balance amount
may be released.}

^{MOST
IMMEDIATE}

^{No.I-11011/41/2003-HII/US(H)/Vol.II}

^{Government of
India}

^{Ministry of
Urban Employment & PA}

^******

^{Nirman Bhawan, New
Delhi-110 11}

^{Dated 15th
June, 2004}

^To

^{Chief
Secretary}

^{All States/Union Territories(As per list attached)}

^{Sub:-
Second
Generation
Reforms under Urban Reforms Incentive Fund (URIF) Scheme.}

^Sir,

^{The Government approved the scheme of Urban Reforms Incentive Fund on
28.6.2003 to provide urban
reform linked assistance to States/Union Territories with an outlay of Rs. 500
crores per annum during the 10th Plan.
The fund under the scheme will be released to the States/Union
Territories as additional central assistance.
Allocation of funds to each State/UT is based on the percentage of its
urban population to the urban population of the country.}

^{2.
During the year 2003-04, reforms in the following areas were approved
by the Government, weightage
for each reform is also
indicated:-}

^{(1)
Repeal of the Urban Land Ceiling and Regulation Act at the State level
by Resolution. - 10% of State’s
Share out of URIF}

^{(2)
Rationalisation of Stamp Duty, in phases, to bring it down to no more
than 5% by the end of the Tenth
Plan period. - 20% of State’s Share out of URIF}

^{(3) Reform of Rent Control Laws
to remove rent control so as to stimulate private investment in rental
housing. - 20% of State’s Share out of URIF}

^{(4) Introduction of computerized
process of registration. - 10% of State’s Share out of URIF}

^{(5) Reform of Property Tax so
that it may become a major source of revenue of urban local bodies, and
arrangements for its effective implementation so that collection efficiency
reaches, at least 85%, by
the end of 10th Plan period. - 10% of State’s Share out of URIF}

^{(6) Levy of reasonable user
charges by Urban Local Bodies, with the objective that full cost of O & M
(Operation & Maintenance) is collected by the end of the Tenth Plan
period. - 20% of State’s Share out of URIF}

^{(7) Introduction of double entry system of
accounting in Urban Local Bodies.- 10% of State’s Share out of URIF}

^{i) Secretary(Department of UEPA.}	^Chairman
^{ii) Secretary(Department of Expenditure)}	^{Member or his representative not below the rank of Joint Secretary.}
^{iii) Secretary(Planning Commission)}	^{Member or his representative not below the rank of Joint Secretary.}
^{iv) Joint Secretary(UD), Department of UD.}	^Member
^{v) Joint Secretary(Housing)}	^{Member Secretary}