Banking on better credit rating to raise funds for big civic infrastructure projects, the Pune Municipal Corporation (PMC) has directed all its departments to give a detailed report of development activities planned in the next five years along with the estimated cost and revenue sources.
The civic body has asked for these reports so as to further submit them for improving its credit rating.
The PMC has a credit rating of ‘AA+’ in the previous year. It has managed to raise funds for the water supply project through municipal bonds on the basis of better credit rating. The rating agency has sought information from the PMC for credit rating surveillance for 2018-19.
“All the civic departments need to submit detailed information on their revenue as well as expenditure. It would help in improving the credit rating of the civic body. If the PMC wants to raise funds through loan or municipal bonds for proposed mega civic projects then the improved credit rating would benefit the civic body,” said Ulka Kalaskar, PMC’s chief accountant.
The civic departments are supposed to provide information on all the civic works that had an expenditure of more than Rs 5 crore in 2018-19 along with the impact of the project after its completion, she said.
The PMC official said the civic departments should provide information on the proposed civic projects in five years, starting from 2018-19 to 2023-24, along with the likely financial planning for the projects.
“The revenue collecting departments of the civic body should submit the information on estimated revenue collection in the next five years from 2018-19 to 2023-24. It should also consist of steps being planned to achieve the revenue targets in next five years,” Kalaskar said.
The civic departments have also been asked to give information of any major initiative taken in the last five years, which is likely to be beneficial for the future, she said.
The PMC, in June, 2017, became the first civic body in the country to raise Rs 200 crore from municipal bonds after a long gap. It has planned to raise a total of Rs 2,264 crore in five years through municipal bonds for implementation of the 24-hour water supply project at the rate of 7.59 per cent. However, the civic administration had come under criticism for hastily raising funds through municipal bonds as a lacklustre approach for implementation of the project. So, the PMC had deposited the raised amount in a fixed deposit account in a bank to compensate for the loss of repayment of municipal bonds despite not using the raised funds.
The credit rating is a prerequisite for urban local bodies to raise money from capital markets and financial institutions and the urban local bodies with investment grade credit rating can float municipal bonds to strengthen their financial capabilities.
The Union government has been promoting raising funds through municipal bonds saying the municipal bond market has potential in fulfilling the financial requirement of the urban sector and this has been largely untapped. It has been incentivising the urban local bodies which are covered under AMRUT and raising funds by issuing municipal bonds. In September last year, the crash of the PMC server had made the civic administration seek an extension on submitting its audit to the Bombay Stock Exchange as part one of the compliance after it raised Rs 200 crore through municipal bonds.