Nod to key urban reforms to ease financial burden on local bodies in UP

Hindustan Times

16-05-2025

LUCKNOW In a move aimed at strengthening urban infrastructure and easing financial pressures on civic bodies, the Uttar Pradesh cabinet on Thursday approved two major proposals under the AMRUT (Atal Mission for Rejuvenation and Urban Transformation) scheme.
The decision is set to provide significant relief to urban local bodies (ULBs), especially those with limited revenue sources, and fast-track delayed development projects across the state.
Funding support under AMRUT 1.0
In a key decision, the UP cabinet sanctioned ₹89.81 crore from State Finance Commission grants to cover the remaining financial contributions of ULBs under AMRUT 1.0. This step is aimed at unblocking critical water supply and sewerage projects that have been stalled due to lack of funds from ULBs.
The cities that stand to benefit include Ayodhya, Mirzapur, Etah, Ghazipur, Rae Bareli, and Unnao — many of which have been facing challenges due to high floating populations and limited financial capacities.
The state government acknowledged that newly constituted municipal corporations like Ayodhya and religious hubs such as Mirzapur face unique fiscal constraints despite their growing infrastructure demands.
Out of 328 approved AMRUT 1.0 projects, 307 have already been completed. This funding decision is expected to ensure timely completion of the remaining 21, improving public service delivery and reducing the operational burden on ULBs.
Major relief under AMRUT 2.0
In another significant decision, the state cabinet approved a revised funding structure under AMRUT 2.0, reducing the financial contribution required from ULBs based on the size of the urban population.
The state will now shoulder a larger share of project costs, making infrastructure development more accessible for smaller cities.
Cities with population over 10 lakh: ULB share reduced from 15% to 8% and the state share increased from 60% to 67%.
Cities with population up to 10 lakh: ULB share cut from 10% to 4%, state share up from 56.67% to 62.67%.
Cities with population below 1 lakh: ULBs to contribute only 2%, with 48% funded by the state and 50% by the Centre.
This new funding model is expected to drastically cut delays and improve execution of vital projects related to drinking water, sewerage systems, green spaces and water body rejuvenation.
'These landmark decisions reflect the government's citizen-centric and inclusive approach to urban development,' said principal secretary, urban development, Amrit Abhijat.
Amendment to dairy dev policy
The cabinet also gave nod to the second amendment to the UP Dairy Development and Milk Production Policy-2022 to bring incentives given to investors in dairy development industry at par with the UP Food Processing Industry Policy-2023.
Briefing media persons, dairy development minister Dharampal Singh said the amendments replace the existing provisions for 10% subsidy in the industry. The incentives would now be 35% of the cost, subject to a maximum of ₹5 crore, for setting up dairy industry. He said the incentive for modernisation of existing dairy plants would be 35%, subject to a maximum of ₹2.50 crore, 35% for buying quality control equipment, subject to a maximum ₹1 crore. It will also be 35%, subject to a maximum of ₹1 crore, to buy refrigerated van/insulated van, milk tanker, bulk milk cooler, ice-cream trolley/deep freezer etc.
Income of village panchayats
The cabinet approved a scheme to encourage village panchayats to increase their income from organising markets or village pond fisheries etc. It decided that the state government would contribute five times of the income generated by the village panchayats. The state government would provide a sum of ₹5 lakh, if the village panchayat earned ₹1 lakh from its own sources.
Panchayat Utsav Bhawan
The cabinet gave nod to a proposal to set up Panchayat Utsav Bhawan in nearly 71 village panchayats. Finance minister Suresh Khanna said a provision of ₹100 crore has been made for this in the state's budget for 2025-2026. Under the Matrabhoomi Yojana, donors willing to contribute would bear 60% of the cost of a marriage home etc while 40% cost would be borne by the village panchayat. The cost of one Utsav Bhawan has been estimated at ₹1.41 crore, he said.