The government is likely to increase the allocation for the Urban Reforms Incentive Fund to Rs 2,000 crore, as against Rs 500 crore announced in the budget 2002-02. A committee set up to work out modalities for implementation of urban reforms has recommended an annual outlay of Rs 2,000 crore, which can be hiked subsequently.
Finance minister Yashwant Sinha, in his budget speech, had proposed setting up of the fund to provide reform-linked assistance to states in the area of urban development.
The committee has suggested an initial corpus of Rs 2,000 crore from which states, which sign an agreement with the ministry of urban development to implement major reform measures, will be given funds in tranches. Since states will require some time to straighten property and legislative issues, this initial corpus will be adequate to begin with, the committee has suggested, adding that the quantum may be enhanced later.
The release of funds is proposed to be linked to the achievement certain milestones. These include: repeal of the Urban Land Ceiling Act by states and changes in land-related laws to facilitate unblocking of lands under old and sub-optimal structures for reconstruction, etc.
Changes in tenancy laws to allow rents to move along market rates and reclamation at the end of the tenancy period without court proceedings, changing the assessment base of the property tax to rationalise taxation with built-in buoyancy and adoption of capital value of the property as fixed by the government for the area in which it is located are other milestones identified by the committee.
It has also recommended that stamp duties should be lowered gradually to 2 per cent-3 per cent. The committee, which has representatives from the urban development ministry, the Planning Commission, various state governments and experts, has also recommended encouraging private sector entry in the sector.
It has also suggested that state governments revise and relax zoning and building regulations in conformity with international practices, keeping community interests fully in view.
