Urban mission loses reform edge

Though Finance Minister P. Chidambaram’s 2005-06 budget kept a clear provision for the “reform-driven” NURM and Prime Minister Manmohan Singh announced the Mission from the Red Fort in his Independence Day speech, it could not be brought earlier before the Cabinet as the states raised objections.

They were opposed to the Centre’s decision to link assistance (under the programme) to mandatory urban reforms, including repealing of the Urban Land Ceiling and Regulation Act, rationalisation of stamp duty to bring it down to no more than five per cent in next five years among other conditions.

West Bengal and Maharashtra are two states yet to repeal the Urban Land Ceiling and Regulation Act due to political compulsions. Both, sources said, lobbied hard to not link the repealing of this act to the NURM funds.

With the Planning Commission acting as an intermediary, the government is now prepared to relax some of the stringent conditionalities, delinking mandatory urban reforms from the poverty alleviation schemes meant for the poor.

Under the NURM, the states were asked adopt any five of the reforms mandatory for Central funds:

• Approval of double accounting

• Reform of property taxes

• Rationalisation of stamp duty to bring it down to no more than five per cent within next five years

• Internal earmarking of basic services to urban poor

• Introduction of independent regulators

• Reform of rent control laws to stimulate private investment in rental housing schemes

• Introduction of the public disclosure law.

Of these, sources said, the Cabinet is likely to relax the stringent clause of rent control law reform, repealing of Urban Land Ceiling and Regulation Act and also remove the specific clause of 5 per cent stamp duty. The states have pointed out that these are not applicable for creating provisions of basic services to the urban poor.

With an outlay of Rs 5,500 crore in the current financial year 2005-06 for 60 cities, including the mega cities, the Mission was drawn up keeping the UPA’s common minimum programme in mind.

The funding pattern would be 35:15:50 between the Centre, state or urban local bodies and financial institutions for mega cities (with population more than 40 million) and 50:20:30 for cities with population between one and four million, and 80:10:10 for other cities.