BENGALURU: To incentivise municipalities and develop urban areas, Finance Minister Nirmala Sitharaman announced that an incentive of Rs 100 crore would be provided for a single bond issuance of more than Rs 1,000 crore. Will this help Bengaluru, which is highly dependent on funds, especially from the state government, to raise money for big-ticket infrastructure?
It should be noted that Bengaluru was the first city in India to issue the country’s first-ever municipal bond in 1997 through the erstwhile Bangalore Municipal Corporation, raising Rs 125 crore which was used to improve the city’s infrastructure.
Civic evangelist V Ravichandar said that in general, the municipal bond market as a source of funding is huge in developed countries. He, however, said we need to think along these lines with fiscal responsibility on utilisation and plans to service the bonds. “The Central government incentive will goad cities to consider bonds,” Ravichandar said, and added that they should be need-based and structured carefully.
Former bureaucrat K Jairaj, who served in different capacities including Commissioner of Bangalore Mahanagara Palike, said, “In 1997, Bengaluru was the first city to raise funds through municipal bonds. They were used for the development of major arterial roads.
Municipal bonds are a great tool for municipalities, and reduce their dependency on funds from the state government.”
“Commissioners of the five corporations must rise and put up a proper project with a clear roadmap to mop up funds, and avail of the Rs 100 crore incentive. I wish the GBA makes good use of this,” Jairaj added.
Stressing that cities like Bengaluru need more and more funding and that they make use of all options available before them to raise funds, brand guru Harish Bijoor said, “Announcement of the Rs 100cr incentive for municipal bonds over Rs 1,000 crore is welcome. There are different ways of funding a city and its needs. Every small bit will go towards making Bengaluru a better city.”