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Fadnavis: Municipal Bonds Can Fund Urban Development, Boost Cities

Maharashtra Chief Minister Devendra Fadnavis advocated for municipal corporations to raise funds through capital market bonds, following the successful listing of Nashik Municipal Corporation's Green Bond. He highlighted that the central government has increased the budget limit for such bonds to Rs 1,000 crore with enhanced incentives. The funds are crucial for Nashik's Rs 25,000 crore developmental works ahead of the Kumbh Mela and for long-term water supply projects. Fadnavis suggested smaller municipal bodies collaborate to issue collective bonds to access these central schemes for urban development.

Key Points: Fadnavis Urges Municipal Bonds for Urban Development Funding

  • Nashik Municipal Corp listed Green Bond on NSE
  • Central bond limit raised from ₹200cr to ₹1000cr
  • Funds for water projects & Kumbh prep
  • Model for other cities via collective bonds
  • Aim to reduce water leakage from 47% to 20%
2 min read

Capital markets to empower urban development via bonds: CM Fadnavis

Maharashtra CM Devendra Fadnavis promotes municipal bonds for city projects, citing Nashik's success and increased central budget limits.

"The infrastructure being created is not just for the mega-event but will catapult Nashik into the league of developed metropolises. - CM Devendra Fadnavis"

Mumbai, March 9

Maharashtra Chief Minister Devendra Fadnavis on Monday said that municipal corporations can raise essential funds for various developmental projects by issuing bonds in the capital market, adding that creating "Innovative Funds," similar to the Nashik Municipal Corporation model, will provide a significant financial boost to urban development.

The Chief Minister was speaking after performing the ceremonial 'Ringing of the Bell' at the National Stock Exchange (NSE) to mark the listing of Nashik Municipal Corporation's Green Bond.

Speaking on the occasion, CM Fadnavis noted that Nashik Municipal Corporation has successfully entered the capital market by issuing municipal bonds through both private placement and public offerings within a single financial year.

He emphasised that municipal bodies should leverage capital markets to fund public welfare projects. "The Central Government has already announced schemes to support this. Initially, approval was granted for bonds up to Rs 200 crore. Given the success, the budget limit for these bonds has been increased to Rs 1,000 crore, with incentive values raised to Rs 200 crore," he stated.

The CM highlighted that developmental works worth approximately Rs 25,000 crore are underway in the Nashik metropolitan area in preparation for the Kumbh Mela.

He remarked that the infrastructure being created is not just for the mega-event but will catapult Nashik into the league of developed metropolises, turning the city into a "magnet for investment."

Nashik Municipal Corporation has secured the top position in both phases of this initiative. Through central government incentives and the Urban Challenge Fund, the NMC will receive interest-free funds. These funds will be directed towards public interest water supply projects, aiming to reduce water leakage from 47 per cent to 20 per cent, he said.

CM Fadnavis suggested that smaller municipal corporations in the state should collaborate to issue collective bonds worth Rs 1,000 crore to benefit from central schemes. He urged the NMC to continue focusing on qualitative urban development through innovative funding.

According to a government release, the capital raised through these bonds will be utilised for critical infrastructure projects, including capacity expansion of the Mukane Dam Pumping Station, construction of a new Water Treatment Plant at Vilholi and laying of a main gravity line from the Vilholi plant to Sadhugram. The primary objective is to ensure a clean and safe drinking water supply for Nashik residents during the Kumbh Mela and for the long-term future of the city.

- IANS

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Reader Comments

P
Priya S
Reducing water leakage from 47% to 20% is a massive goal. If the bond money is truly used for such critical infrastructure, it will be money well spent. We need this kind of focus on basic amenities in every Indian city, not just before a Kumbh Mela.
R
Rohit P
The idea of smaller municipalities collaborating for a collective bond is smart. It can help tier-2 and tier-3 cities get access to funds they wouldn't manage alone. But the key will be governance - we need strong oversight to ensure the funds are not misused. Hope they have a solid audit mechanism in place.
S
Sarah B
As someone interested in sustainable finance, the listing of a 'Green Bond' is very encouraging. It's good to see Indian municipalities tapping into this global trend. The focus on water supply projects makes it a genuine green investment. More details on the environmental impact would be welcome.
V
Vikram M
While the model sounds great, I have a respectful criticism. My worry is about the repayment burden falling on citizens through higher taxes or user charges later. Municipal bonds are not free money. The projects funded must generate enough revenue or efficiency savings to service the debt, otherwise it's a liability for the next generation.
K
Karthik V
Nashik setting an example! 🎉 If this works, it can be a blueprint for urban development across Maharashtra and India. Turning cities into "magnets for investment" is the right vision. Long-term planning for post-Kumbh infrastructure is crucial. Hope the development is sustainable and inclusive for all residents.

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