India Signs USD 400 Million Loan Agreement with ADB to Boost Urban Reform Agenda

November 14, 2023

The central government of India has inked a significant USD 400 million policy-based loan agreement with the Asian Development Bank (ADB) to support its urban reform agenda. The agreement aims to enhance urban infrastructure, service delivery, and governance systems.

Program Overview

Sub-programme 1, approved in 2021 with a financing of USD 350 million, laid the foundation for national-level policies and guidelines to improve urban services. Sub-programme 2 focuses on investment planning and reform actions at the state and urban local body (ULB) levels.

Support for AMRUT 2.0 and Water Security

Sub-programme 2 supports state and ULB-initiated reforms in operationalizing the national flagship program, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0, which aims to provide universal access to water supply and sanitation. The program also focuses on urban water security, reducing water losses, recycling treated sewage, rejuvenating water bodies, and maintaining sustainable groundwater levels.

Integrated Urban Planning Reforms

The program encompasses integrated urban planning reforms, including legal, regulatory, and institutional changes. It also involves capacity building for ULBs and community awareness. Key aspects include modernization of building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning with a focus on transit-oriented development.

Climate Resilience and Financial Sustainability

Integrated planning incorporates climate and disaster resilience, promotes nature-based solutions, enhances the urban environment, and improves financial sustainability. Cities are encouraged to become creditworthy through revenue enhancement measures such as property taxes and user charges, improving efficiency, and rationalizing expenditures.

Innovative Financing for Urban Infrastructure

The program aims to help cities mobilize innovative financing options, including commercial borrowings, municipal bonds, sub-sovereign debts, and public-private partnerships. These mechanisms will address significant deficits in urban infrastructure investments.

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