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Best of PIB: 27 Feb 2017 for UPSC Exam

Ministry of Urban Development – 5 major transformational 
reforms for urban development

The Ministry of Urban Development (UD) has evolved a new reform matrix to enable State and City governments to go beyond the present incrementalism (taking small steps towards implementing transformational reforms) over the next three years, for a turnaround in urban governance, planning and finance.

The major recommendations of group of secretaries are: 

    1. Moving to a Trust and Verify Approach – Presently there is an approach of verifying first and approving later, which has resulted into huge delays. It has been recommended that trust needs to be reposed in the citizens and approvals may be accorded first and to be verified later. This ‘Trust and Verify’ approach has been recommended in respect of Permissions for building construction, Change of title in municipal records (mutation) and Birth and Death registration, involving the largest number of physical interactions between city governments and citizens.
    2. Formulating Land Titling Laws – The Group has quoted a study by McKinsey which has noted that over 90% of the land records in the country are unclear and land market distortions and unclear land titles are costing the country 1.30% of GDP per year and accordingly recommended enactment of Land Titling Laws and their implementation in a specific time frame.
    3. Credit Rating of Urban Local Bodies

    4. Value Capture Financing – The total revenues of the municipal sector accounts for only 0.75% of the country’s GDP as against 6% for South Africa, 5% for Brazil and 4.50% for Poland. The Group has recommended Municipal Bonds further to Credit Rating of ULBs and Value Capture Finance tools for meeting the capital expenditure needs of cities.
    5. Improving Professionalism of ULBs – The Group of Secretaries noted that a bureaucracy that is based on merit rather than seniority could add nearly a percentage point annually to the country’s per capita GDP growth. It also expressed concern over shortage of qualified technical staff and managerial supervisors in ULBs preventing innovation, the Group recommended induction of professionals in city governments by encouraging lateral induction and filling top positions in cities (Commissioners and Heads of Finance and Revenue) through open competition.

To incentivize, implementation of these five transformational reforms, the Ministry of Urban Development has proposed to increase Reform Incentive Fund from Rs 500 Cr during 2017-18 to over Rs 3000 Cr per year over the next three years of implementation period.

Cities will be ranked based on performance under each reform category for providing reform incentive.

Rs 400 Cr was distributed during 2016-17 for those who pursued reforms indicated in AMRUT Guidelines.

Ministry will also discuss with States and UTs new initiatives such as Transit Oriented Development Policy, Metro Policy, Green Urban Mobility Scheme, and Livability Index for Cities, Value Capture Policy and Fecal Sludge Management Policy.

The group of secretaries has given the following framework for implementation of the five reforms:





Trust and Verify method

Bringing online the three services mentioned in 53 million plus population cities and capital cities

Online provision for all 500 AMRUT cities

Online provision for all statutory 4,041 cities

Credit Rating and Municipal Bonds

All 500 AMRUT cities to complete Credit Rating

Action to be taken for floating bonds

Action to be taken for enhancing credit worthiness


Bonds to be floated for all cities which have investment grade



-Second round of credit rating for all 500 cities

Rating up gradation by at least one level


Land Titling

Enactment of laws for land titling

Implementation and providing urban title certificates on demand

To complete all survey and legacy data and make available title certificates for all properties

Value Capture Finance

Formulation of VCF policy, tools and rules at State level

Implementation in 53 million plus population cities

Implementation in all 500 AMRUT cities including Smart Cities

Professionalization of Municipal Cadre

Establishing cadre with assessment of requirements, formulation of Recruitment Rules

Filling up of posts

Completion of filling up of posts



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