Municipality Bonds in India

Municipal bonds all over the world have a huge capital market but in India these have not been used. The government is drawing up a list of municipalities which could issue bonds to attract funds from the capital market. As per a recent statement of Urban Development minister Kamalnath, Government has assigned an agency to look at which municipal corporations are bankable, which in the short term will be able to issue municipal bonds,” said Urban Development minister Kamal Nath. The minister also suggested that apart from raising funds by issuing bonds, municipalities could also raise financial resources by leveraging assets like unused land. In India there is a huge urban infrastructure deficit and our population has increased from 285 million in large urban areas in 2001 to 400 million in 2011.

In the next 15 years it is likely to grow up to 600 million. In the next decade there would be more than 70 cities with a population of million. This (infrastructure) deficit that we have, unless we act now, will only increase – Kamalnath.