CHENNAI: Chief Minister M K Stalin will be presiding over a function here for listing municipal bonds of the Greater Chennai Corporation (GCC) on the National Stock Exchange (NSE) on Monday.
The Sixth State Finance Commission, in its recommendations to the government, had said the urban local bodies (ULBs) must be encouraged to issue bonds and other debt instruments to augment resources for capital projects.
Given the funding requirements of the ULBs, and given the fact that the other two tiers of the government are permitted to have deficit financing of their budgets, the condition that ULBs must be surplus for three consecutive years for issuing bonds seems onerous.
The Commission said efforts need to be taken by the government to modify the conditions for the issue of bonds in consultation with the regulatory authorities. The state government, in its Action Taken Report, accepted this key recommendation.
On April 30, the GCC had passed a resolution in its council meeting allowing the corporation to issue municipal bonds to raise funds for the integrated stormwater drain project. The GCC had also said that it is in the process of issuing rated, listed, taxable, unsecured, redeemable, non-convertible municipal bonds for Rs 200 crore under SEBI Regulations.