Hike in support to civic bodies to boost appeal of municipal bonds


MUMBAI: Top municipalities in the nation are probably to get a funding boost in the price range as the federal government prepares to empower civic bodies that can play a key function in strengthening the standard of life in a quickly urbanising India.

The fifteenth Finance Commission could advocate up to 2 lakh crore in fund allocation over the subsequent 5 years to municipalities throughout the nation in its report subsequent Monday, two sources accustomed to the matter instructed ET. “It will likely have big provisions for cities, both in terms of money and reform measures, besides others,” mentioned one of sources.

This ought to considerably enhance the monetary well being of these native bodies, many of them aiming to elevate bonds. Asia’s richest civic physique, Brihanmumbai Municipal Corporation, is planning to elevate up to 4,000 crore, the Times of India reported on January 25.

The 14th Finance Commission had allotted 87,000 crore for the interval between FY16 and FY20. There was an interim report for FY21, launched in the final price range.

An emailed question despatched to the division of financial affairs remained unanswered.

“Financial sustainability and financial accountability of Urban Local Bodies are critical to transforming urban infrastructure in India,” mentioned Srikanth Viswanathan, CEO at Janaagraha, a Bengaluru-based NGO engaged on governance reforms and citizen participation in cities. “If urban local bodies receive predictable and untied fiscal transfers in the form of Finance Commission grants, their financial health would improve. Private investors would start gaining confidence to invest in municipal borrowings including bonds.”

The coronavirus has compounded the monetary place of native bodies. Also, alleged reluctance by states to pursue collections has additional weakened the assets.

Fund allocations will probably be launched to sure classes of cities, particularly for endeavor enhancements in key social infrastructure resembling air high quality, consuming water and strong waste administration.

There are about 3,700 city native bodies in the nation. The authorities has been encouraging them to elevate cash in the capital market. However, personal buyers are apprehensive of the municipal bonds. “Any surge in funding boost will help lift investor confidence in muni bonds,” mentioned an area funding banker.

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