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POVERTY REDUCTION STRATEGY TN

6. loans from financial

6. loans from financial institutions and some of the larger municipal bodies can also raise funds from market from public through floating of Bonds. Strategies for the urban local government for raising own source revenue should include the following: 1. fuller exploitation of property tax, vacant land tax, and development charges in the municipalities, 2. augmenting the tax base of the slums by de-notifying the slums with adequate services and levy and collection of municipal and other taxes from these areas, 3. levy of user charges for individual service connections (for water supply, sewerage, electricity, etc.) on full cost recovery basis in the slum areas, 4. selling the land title (on full/part cost recovery basis, based on the economic profile of the beneficiaries) to raise capital for other capital works on slum upgrading, and 5. raising additional rental income from property owned by the urban local bodies. The Twelfth Central Finance Commission has sanctioned “Specific Needs Grant” of Rs. 250 crore for slum development in Chennai and other towns in the State during 2005-20. This should be efficiently utilized. The First and Second State Finance Commissions established the deficit in urban infrastructure in Tamil Nadu at around Rs.11250 crore, while some studies point out that the effective capacity of urban local bodies (ULBs) to invest in sustainable urban infrastructure over the next five years to be approximately Rs. 4245 crore. The GoTN’s Eleventh Plan document also notes that recognizing the need for continuing the reforms in urban governance and service delivery arrangements, and the capacity of the ULBs to absorb investment, Tamil Nadu Urban Development Plan (Third Phase) TNUDP III has been designed. TNUDP III is intended to consolidate the achievements of TNUDP II, and continue to improve urban infrastructure services in Tamil Nadu in a sustainable manner. Similarly, TUFIDCO, a State owned Organization, was incorporated to extend financial assistance to urban infrastructure schemes in Tamil Nadu. The State Government has also appointed TUFIDCO as a State level nodal agency for the centrally sponsored schemes. To ensure focus on total flow of funds through the schemes such as Jawaharlal Nehru National Urban Renewal Mission Programme, Urban Infrastructure Development Scheme for Small and Medium Towns, Mega City Programme, Integrated Development of Small and Medium Towns, Metropolitan Infrastructure Development 178

Fund, GoTN has created Tamil Nadu Infrastructure Development and Renewal Fund (TNUIDRF) for infrastructure development assistance to urban local bodies. c. Structuring Expenditure: The municipal budgets have to provide increased allocation for slum rehabilitation, city roads, and development. For undertaking capital expenditure on urban infrastructure, municipal debt may be utilized at least for the larger cities. As far as health and education are concerned, there are some hospitals and schools, which may be under the control of the city administration. Children living in slum areas are often forced to discontinue education and start doing some work. Hygienic conditions in slum areas are also a challenge. Major expenditure has to go for dismantling of illegal slums and rehabilitation activities. Location of new schools close to the clusters where poor may reside will also help. d. Targeting: The four tier targeting strategy (District-Cities/Town-Slum/Non-slum Zones/Wards-Households) should focus on towns of a certain size of population, and devise separate targeting strategies for the slum population and the poor in the non-slum areas. For the slum population, location-specific schemes may work. For non-slum population targeting can be for extremely poor households or individuals. Targeting slum population is more straightforward because the geographic location of the cluster is identifiable. Non-slum poor are diffused all over the urban agglomerations. Information from NGOs operating in the concerned areas may be valuable for reaching the urban non-slum poor. Slum children and children of non-slum poor should be the main targets for education related strategies. e. Enhancing Efficiency: Allocation of funds under different schemes should be according to the estimated number of poor in the slums and the extent of relative deficiency. For the non-slums poor, in the urban agglomerations separate schemes may be used. Here, well publicized self-targeting schemes may be most effective. Allocations should be made separately under respective criteria for health, education, income, and gender related schemes. Some specific efficiency enhancing steps are suggested below. i. Focus has to be on rehabilitation rather than marginal improvement of the slums where they exist. ii. Undertake notification and de-notification of slums as this exercise may have been undertaken quite some time back and several slums may have been upgraded under various schemes. 179

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