The Centre has allowed two states — Andhra Pradesh and Madhya Pradesh — to borrow additional financial resources of Rs 4,898 crore following reforms in urban local bodies, the finance ministry said on Wednesday.

The two states have successfully completed the set of reforms required in the functioning
of ULBs as specified by the department of expenditure.

“Andhra Pradesh and Madhya Pradesh have been granted permission to mobilise additional financial resources to the tune of Rs 4,898 crore through open market borrowings. Out of these, Andhra Pradesh has received permission for Rs 2,525 crore, while Madhya Pradesh has been permitted to mobilise additional Rs 2,373 crore,” the ministry said in a statement.

Reforms in the urban local bodies and the urban utilities are aimed at strengthening them financially and to enable them to provide better public health and sanitation services.

Economically rejuvenated ULBs will also be able to create good civic infrastructure, the ministry said.

The Centre had in May enhanced the borrowing limit of the states by 2 per cent of their Gross States Domestic Product (GSDP). Half of this special dispensation was linked to undertaking citizen centric reforms by the states.