Exclusive use of fund for particular purpose

(1) Notwithstanding anything contained elsewhere in this chapter, the State Government may, by order, require the municipality to establish a Revolving Fund by earmarking a portion of the Municipal Fund or a particular grant or a part thereof, or any item of receipt under any head of account, or any percentage thereof, or any share of tax receivable by the municipality other than taxes, duties and fines assigned to the municipality under this Act or any part thereof, to be utilized exclusively for such purpose related to municipal functions as may be specified by the State Government, and it shall be the duty of the municipality to act accordingly. (2) Every municipality shall constitute a separate fund called the Basic Services to the Urban Poor Fund for the purposes of delivery of basic services of the urban poor, including the inhabitants of slum areas. Explanation- For the purposes of this sub-section, ‘basic services’ shall include expenditure on capital and revenue account directly incurred on Water supply, Drainage, Sewerage, Construction of community toilets, Solid waste management, Connecting roads, Street lighting, Public parks and play grounds, Community and livelihood centers, Community health centers, Pre-primary and primary education centers, Affordable housing for poor, and other services as determined by the Municipality, but shall not include establishment expenses, including salary and wages, not directly and specifically incurred for delivery of basic services to the poor. (3) A minimum of twenty five percent of the funds within the municipality’s budget shall be earmarked and credited to the fund created under sub-section (2), on yearly basis. The allocation to the fund shall be made from the following municipal budgetary resources- (a) Municipality’s own sources of revenue e.g. taxes, fees, user charges and rent etc.; (b) Assigned revenues; (c) Allocation from Central and State Finance Commissions, and other inter-governmental transfers; (d) Contributions, in cash or kind, gifts from individuals, organizations and donors for services to the poor; (e) Grants from externally aided projects; (f) Sale of municipal assets; (g) Others sources, as determined by the state government. Explanation- For the purpose of this sub-section, any grant or contribution by whatever name called, received by the Municipality which is exclusively for the development of slum areas, shall not be a part of the earmarked funds. (4) The municipality shall prepare a separate budget known as P-budget along with the municipal budget, every year, which shall furnish the details of income and expenditure under fund created under sub-section (2). (5) The fund created under sub-section (2) shall be in the nature of a non-lapsable fund. In the event of the annual allocations not fully utilized, the balance funds shall not be transferred to the municipal fund but carried forward for utilization in the subsequent year(s). The fund allocation in the subsequent years shall be considered in addition, and shall not be reduced by the unspent funds of the previous year(s). (6) The municipality shall open a separate bank account with a nationalized bank called, ‘Basic Services to Urban Poor Fund’ account, wherein funds earmarked under sub-section (3) shall be periodically deposited, ensuring that the yearly allocation is equal to the allocation as in the municipal budget. (7) The municipality shall maintain separate books of accounts with detailed accounting heads in line with municipal accounts manual, as referred under section 113, for operation of this special fund accounts.