Even as Pune and Ahmedabad municipal corporations prepare to float bonds to raise money from the market for urban development projects, country’s richest civic body, the Brihanmumbai Municipal Corporation, has decided against issuing such bonds. Senior officials said the Mumbai civic body has deposits worth Rs 60,000 crore and thus, has abundant funds for its proposed projects. “We have our own sources of revenue and it doesn’t make sense for us to issue bonds that are riskier investments than the fixed deposits that give us 9 per cent interest,” said Municipal Commissioner Ajoy Mehta.
Referring to the coastal road project, the biggest such project to be undertaken by the BMC right now, officials said the civic body is capable of funding it without seeking financial help. The project is expected to cost Rs 1,2000 crore.
Another official said that such bonds were useful for smaller corporations such as the Pune civic body. “Civic bodies that don’t have big budgets can avail of these bonds in which the principal amount is paid by the corporation and a portion of the interest is paid by the Centre. Such bonds help the corporation provide better infrastructure while the loan becomes cheaper,” said the official.
In order to develop the country’s municipal bond market, the Centre had recently announced an interest subsidy of Rs 400 crore. The urban development ministry expects that several other municipalities to float bonds to raise money from the market for development projects in the current financial year. Highlighting the importance of the interest subsidy being offered, officials of the urban development department said an impetus to municipal bonds is important for larger urban reforms.