In a strategic move to enhance the financial efficiency and service delivery of Urban Local Bodies (ULBs), the Government of Andhra Pradesh has issued a detailed set of guidelines for utilising municipal funds. The new policy framework, formalised through Government Order (G.O.) Ms. No. 75 by S. Suresh Kumar, Principal Secretary of the Municipal Administration and Urban Development (MA&UD) Department, will come into effect from April 1, 2025.

These guidelines are designed to grant greater financial autonomy to ULBs while aligning with the State’s long-term development vision, Swarna Andhra@2047, and the national initiative, Viksit Bharat@2047. The overarching aim is to stimulate economic growth with a targeted annual increase of over 15% in Gross State Domestic Product (GSDP).

Capital Allocation Mandates

As part of the new financial structure, municipalities are now required to allocate a minimum portion of their revenue receipts to capital expenditure. The prescribed percentages vary by the grade of the ULB:

• Municipal Corporations: Minimum 30%
• Selection and Special Grade Municipalities: Minimum 28%
• Grade I and II Municipalities: Minimum 25%
• Grade III and Nagara Panchayats: Minimum 20%
  

Additionally, at least 30% of income, excluding government grants, must be earmarked specifically for public health initiatives, as mandated under the Public Health Act, 1939.

Focus on Core Urban Services

The guidelines place strong emphasis on the improvement of essential urban services. ULBs are expected to ensure:

• 100% door-to-door solid waste collection
• Leak-proof and uninterrupted water supply
• Pothole-free roads
• Fully functional and energy-efficient street lighting
• Complete eradication of vector-borne diseases
• Strict adherence to the Prohibition of Employment as Manual Scavengers and their Rehabilitation Act, 2013

Further, 40% of net municipal funds are to be invested in the development of slum infrastructure and livelihood enhancement for marginalised communities.

Categorisation of Expenditure

Expenditures have been classified into two main categories:

• Maintenance Expenditure: Covers recurring operational costs, including wages for sanitation and water supply staff, vehicle maintenance, power charges, procurement of disinfectants, and upkeep of roads, drains, parks, community toilets, and streetlights.

• Capital Expenditure: Encompasses infrastructure development such as construction of new roads and drainage systems, installation of water pipelines, establishment of sewerage treatment plants, creation of composting units and dumping yards, and procurement of essential equipment like fogging machines and garbage vehicles. It also includes the development of public assets such as community halls, burial grounds, and municipal office buildings.
  

Strengthened Oversight Mechanism

To ensure transparency and accountability in fund utilisation, a comprehensive monitoring system will be established. This includes the deployment of a dedicated expenditure dashboard integrated with the ERP system. Periodic reviews will be conducted—fortnightly by the Municipal Administration Directorate and monthly by the State Government.

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Finance Minister Payyavula Keshav, during the 2025–26 Budget Session, underscored the pivotal role of ULBs in driving grassroots development and urban transformation. Echoing this sentiment, Principal Secretary S. Suresh Kumar noted that these reforms are intended to empower municipalities as engines of growth and ensure last-mile delivery of quality urban services.

With these guidelines, Andhra Pradesh sets a robust foundation for urban governance and infrastructure development, ensuring that its cities and towns are well-equipped to meet the challenges and aspirations of the coming decades.

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