Daijiworld Media Network - Mangaluru (SHP)
Mangaluru, Feb 23: US President Donald Trump's much-hyped visit to India may result in establishing technical cooperation to float in municipal bonds for urban projects. The US treasury department would provide technical know-how to six cities, including five smart cities, where funds from bonds can be used in water supply and sewer projects.
Municipal bonds are loans that investors make to local administrations. The US treasury department is expected to sign memorandums of understanding with six cities that have high credit ratings and have done the necessary groundwork for floating municipal bonds to raise money for major urban renewal projects, stated a report by Economic Times (ET).
Mangaluru is among the six smart cities, the others being Mysuru, Rajkot, Vadodara, Lucknow, and Pimpri Chinchwad. This would be the first time these cities would raise money from the open market through municipal bonds. The bond market is relatively new for cities in India. But, Pune is considered to be a pioneer of this method.
The US treasury department has reportedly supported the city of Pune to begin this process on a pilot basis. Seven other cities have also raised funds worth Rs 3,200 crore for municipal projects. These include Hyderabad, Indore, Amravati, Bhopal and Visakhapatnam. With the help of the programme, technical assistance is being offered to more cities. The ministry of housing and urban affairs gauged credit ratings of all cities and asked cities to give a proposal.
The project was then put before Niti Aayog and department of economic affairs for their approval. After necessary go-ahead, 13 cities were shortlisted and eight cities were found better prepared to float bonds than others. A final list was drawn up with six cities. The increase in the number of cities prepared to float municipal bonds reflects well on financial health.
In the ET report, a senior official was quoted as saying, “Most cities are undertaking government grant-based projects. The cities need to become financially self-sufficient. Municipal bonds provide that option.”