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Withing four days of receiving the proposal for the final nod for implementation, the state government on Monday gave the go-ahead to Pune Municipal Corporation (PMC) to raise Rs 2,264 crore through municipal bonds for the water supply project while clarifying that it would not be guarantor to the civic body. This is the first time the civic body is raising funds through municipal bonds for undertaking development projects.
In the government resolution approving the PMC proposal, the state government said that the civic body had prepared a plan to revamp the water supply network to ensure 24×7 and equitable supply throughout the city. The project is estimated to cost Rs 3,513 crore and the civic body after availing funds from various government schemes and its contribution would raise the remaining Rs 2,264 crore from municipal bonds in phases.
“The state government is giving consent to the PMC to raise funds from municipal bonds on the condition that the PMC will have the complete responsibility to repay the raised amount, along with the interest. The state government would not be guarantor to PMC for the purpose,” it said.
It further said that the PMC should open a separate escrow account in nationalised bank for repayment of the raised amount through municipal bonds. “The PMC should take care that the repayment takes place on time. The state government would not be able to provide any help for it,” government resolution said.
The Rs 2,264 crore should be raised through municipal bonds in phases, it said the PMC should submit the details of raising funds and repayment to the state government on regular interval. As per the PMC plans, the civic body would improve the water supply across the city by taking up work on existing water treatment plan, construction of overhead water tanks and distribution network.
Last week, the PMC general body had approved the civic administration proposal on raising funds through municipal bonds with majority vote of the ruling BJP while the opposition, led by NCP, Congress, Shiv Sena and MNS, had voted against it.
The civic administration had claimed that the funds from municipal bonds would be at an interest of 8 per cent though it would be based on market rates, but the PMC would get a rebate of 2 per cent as the Centre has assured of the same. It had also expressed hope that the PMC would be able to raise a good amount of funds as the credit ratings of the civic body is best in the country and many would be interested in investing in the municipal bonds.