GOVERNMENT OF PUNJAB DEPARTMENT OF LOCAL GOVERNlvIBNT (LOCAL GOVERNMENT - II BRANCH) NOTIFICATION No,06/06/2025-5LG2/ L/ 2--,9 Dated: ~0 ,- l,,.. U In supersession of all earlier guidelines regarding utilisation of Municipal Development Fund issued vide letter no. PWSSB-2005/W-4/18384-89, Dated 05-07-2025, the Governor of Punjab is pleased to revise the Guidelines of Municipal Development Fund, Dated 05-07-2025 namely:- INTRODUCTION The origin of the Municipal Development Fund (MDF) is rooted in the necessity to address the widening infrastructure gap in Punjab's rapidly expanding urban landscape, The Municipal Development Fund (MDF), was established for financing urban infrastructure development in Punjab. At its inception, the guidelines dated 05.07.2005 defined the objective was "to finance infrastructure projects in urban areas such as water supply, sewerage, drainage, solid waste managem_ent, environmental protection & roads etc. " Accordingly, the Department of Local Government receives l\IDF in annual budget allocation from Finance Department.
Initially, the primary attention of the Fund was defined as the ;Jocus o/MDF in the initial phase shall be to improve the quality of life in urban areas by comprehensive provision of water management services covering the entire water cycle from water supply, sewerage, treatment, and disposal. Storm water and drainage infrastructure would be provided.
Further, it was clarified that the "the priorities of the Municipal Development Fund are firstly, to provide safe and potable drinking water for 100% population in eligible towns and its disposal in a safe manner qfter treatment a/wastewater as per Manuals/or Water Supply, Sewerage and Sewage Treatment and e11vironment norms. Secondly, MDF will address effective storm waler drainage and solid waste management projects. " However, over the past two decades, the scope of urban development has evolved with increasing emphasis on providing civic amenities, especially cleanliness and sanitation.
Hence, it is imperative to update the scope and eligibilities of projects that can be financed by :MDF. To make the fund more inclusive and responsive to the diverse needs of Urban Local Bodies of Punjab, it is proposed that the scope and eligibility criteria be redefined and expanded.
OBJECTIVES The primary objective of the Municipal Development Fund is to finance infrastructure projects that significantly enhance the quality of life and economic productivity of urban areas in Punjab. The foundational goal of the fund is to achieve universal coverage in basic civic service~. The focus in the initial phase was mainly on water management which includes covering the entire cycle from supply and sewerage to treatment and disposal but, now, it needs to be expanded and it is necessary to include holistic overall urban development.
Therefore, the scope of fund needs to be upgraded and it is imperative to include other civil amenities which includes public utilities like roads, street lights, public safety and surveillance among other amenities. In addition, the fund seeks to protect the urban environment through the development of parks, green belts, and cuvenation of water bodies. This aligns with sustainable development goals and climate resilient urban planning.
Moreover, since lack of maintenance/ inadequate maintenance is the primary cause of premature asset deterioration, the fund has introduced an O&M provision for water management products. It is imperative that the l\IDF be utilized for financing O&M expenses up to a limit of20% of the total project cost of water management projects. This provides a vital cushion for ULBs during the initial stabilization phase of a project.
ELIGIBILITY AND SCOPE The :MDF is open to all statutory Urban Local Bodies in the State of Punjab, including Improvement Trusts. The scope of the fun~ has been expanded to encompass a wide array of urban interventions while maintaining strict boundaries to prevent the diversion of funds into non-essential expenditures.
To make the fund more inclusive and responsive to the diverse needs of Urban Local Bodies of Punjab, it is proposed that the scope and eligibility criteria be redefined as under:
The Municipal Development Fund (MDF) shall be provided as a grant to create and upgrade urban infrastructure and provide basic civic amenities, viz. roads, street lights, water supply, sewerage, drainage, solid waste ma11ageme11t, sanitation, cleanliness, public utilities, public safe'ty and surveillance, environmental protection and other sustainable infrastructure in urban local bodies, including areas under t!ze operation and control of improvement trusts. The MDF can also be utilized for fina11cing Operations and Maintenances (0 & M) ET[}ense.~ of the water supply and sewece projects, upto the limit of 20 % of the Total Project Cost.
• Dated, Chandigarh: MANJri S~ B~
2...o - D 1. _ 1-0l-lS Secretary to Gov~;nt of Punjab Department of Local Government Memo No.06/06/2025-5LG2/ 4 \ 0 . Dated, Chandigarh: ')...o .,.. l.-~ A copy is f onvarded to the Controller, Printing & Stationary, Punjab, Mohali, with the request to publish this notification in the Extraordinary ette of the State Government.
, Under Secretary Local Government ~~ Memo No.06/06/2025-5LG2/ L( 3 f ,.- S ' • Dated, Chandigarh: )o ,- l..r-2-,6 A copy of the above is forwarded to the below mentioned for infonnation nnd necessary action:-
1. Director, Local Government, Punjab;
2. Chief Executive Officer, Punjab Water Supply and Sewerage Board;
3. All Commissioners, Municipal Corporation, Executive Officers, Improvement Trusts/Municipal Councils in the State of Punjab;
4. Superintendent, LGl, LG3 and LG4 B'ranch;
5. All Officers of Directorate;
6. All Additional Deputy Commissiouer (Urban Developm nt/General), Punjab.
Under Secretary I.:ocal Govenunent /< .. J {"type":"Document","isBackSide":false,"languages":["en-us"],"usedOnDeviceOCR":false} {"type":"Document","isBackSide":false,"languages":["en-us"],"usedOnDeviceOCR":false}