Financially strapped Himachal Pradesh has issued orders for the withdrawal of 50 per cent grant-in-aid totalling to Rs 143.8 crore from its 60 urban local bodies (ULBs) on the plea that instead of the annual funding, a monthly grant would be released.

The ULBs, comprising 26 nagar panchayats, 29 municipal councils and five municipal corporations, were issued directions by the Director, Urban Development Department, on September 23, asking them to deposit 50 per cent of the grant-in-aid within two days with the state government. Hence, the nagar panchayats will have to surrender Rs 76.8 crore, municipal councils Rs 33.3 crore and municipal corporations Rs 33.74 crore.

The grant, including funds for General Development Plan and Scheduled Caste Development Plan, was received by the ULBs under the Sixth Finance Commission for the current financial year on July 25.

Terming the withdrawal plan an economic measure, the Finance Department has said funds would now be released on a monthly basis.

Many civic bodies, however, are not in a position to return the funds. The Solan MC, for instance, has already used a sizable portion of its Rs 4.38 crore funding, an official said, adding that tenders have been called for several key works.

The new directions will adversely hit developmental works for which tenders have been invited, said sources.

“The sudden withdrawal will hit the pace of developmental works. Solan has spent a major part of the grant-in-aid and several urgent works, including rain restoration activities, will be affected,” said Shailender Gupta, a councillor from Solan Municipal Corporation.

Terming the decision detrimental to the development of ULBs in the state, Gupta said the Congress government had already reduced the grant by 20 per cent this year vis-à-vis last year. The decision comes as a double whammy as fund scarcity was already coming in the way of executing need-based projects like restoration of roads and paths, the sources added.