 "Credit rating of cities takes off")
In a bid to make cities get their act together and become active in the bond market so that local municipal bodies can mobilise resources, a first-of-its-kind credit rating has been launched. To begin with, Ahmedabad Municipal Corporation and New Delhi Municipal Council have been rated as A--.
In all, 85 cities would be given credit rating by March next year, a statement from the urban development ministry said. Pune and Ahmedabad are in the advanced stage of going for municipal bonds.
Municipal bond, a term commonly used in the US, is meant to finance public projects such as roads, schools, airports and infrastructure.
Venkaiah Naidu, Union minister of urban development, has directed officials to follow up with states on a regular basis to ensure that all urban local bodies get credit rating at the earliest, which is necessary to float municipal bonds for mobilising resources.
“We want cities to be active in the bond market as it is necessary to mobilise resources. This, in a way, forces the local bodies to get their act together and raises a spirit of competition,” said a senior ministry official.
He added that under the Atal Mission for Rejuvenation and Urban Transformation (AMRUT), the ministry wants 500 cities to get their ratings done. Under the initiative for credit rating of urban local bodies, 85 cities have launched the process.
The speedy implementation of new urban missions launched last year has resulted in the urban development ministry spending 70 per cent of Plan funds for 2016-17 during the past five months of the current financial year.
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The official added that credit ratings can be carried out by any of the identified private agencies. “As a part of handholding, the states and ULBs (urban local bodies) for speedy execution of projects under new initiatives, the UD (urban development) ministry has identified substantial source of resources from various domestic and multi-lateral lending agencies,” said the ministry.
These include Asian Infrastructure Investment Bank ($5 billion), Asian Development Bank ($1 billion), Japanese International Cooperation Agency ($500 million), BRICS Bank ($500 million per city), and AFD (Euro100-200 million). Housing and Urban Development Corporation is likely to support the Smart City Mission with Rs 10,000 crore.
According to the ministry, in addition to 68 projects that were launched in 14 smart cities in June this year, another 134 projects have been identified, of which 114 projects are under bidding. While the first batch of 20 smart cities have set up special purpose vehicles, the 13 cities identified under the Fast Track competition would do so by the end of this month.
The ministry has approved an investment of ~1.24 lakh crore for improving basic urban infrastructure. This includes Rs 78,000 crore investment under Smart City Plans of 33 cities and another Rs 45,935 crore under AMRUT.
Also, against Plan allocation of Rs 21,000 crore for 2016-17, the urban development ministry has incurred an expenditure of Rs 14, 725 crore till August this year.
MUNICIPAL BOND RATINGS
MUNICIPAL BOND RATINGS
- Ahmedabad Municipal Corporation and New Delhi Municipal Council given ‘A--’
- In all, 85 cities would be given credit rating by March next year
- Urban Development Minister Venkaiah Naidu says under AMRUT, the ministry wants 500 cities to get their ratings done
- The municipal bond is meant to finance public projects such as roads, schools, airports and infrastructure