Naidu to Local Bodies: Raise Your Own Funds

Pic Courtesy: Official Twitter Handle Of Venkaiah Naidu
Pic Courtesy: Official Twitter Handle Of Venkaiah Naidu

Union Urban Development Minister M Venkaiah Naidu today said the municipal bodies should look at avenues to raise funds locally instead of expecting funds from the Central and state governments. Naidu, who was in Mumbai to attend the listing of the Rs 200 crore bond by the Pune Municipal Corporation (PMC) on the Bombay Stock Exchange (BSE), said there is enough money in the system but the local bodies need to tap them efficiently through various modes of funding. 

"The listing of the PMC bonds marks the urban revival in the country. This event is going to have a wider impact on urban development. The time has come when cities (local bodies) start looking inward and raise money," Venkaiah Naidu said.

PMC has raised Rs 200 crore by selling 10-year bonds at a coupon of 7.59 per cent. The issue was oversubscribed six times. The proceeds will be used for a Rs 2,300 crore water project. The minister assured that the Centre will fund any developmental project undertaken by municipal local bodies but it is necessary that they should actively participate in raising resources for providing the necessary infrastructure and amenities to the citizens. He, however, noted that the resources should be raised in the most transparent manner.

"Prime Minister Narendra Modi has said that at least 10 cities should issue municipal bonds within a year. Other cities should now follow Pune and Ahmedabad," Naidu said.

Union Minister of State for Finance and Corporate Affairs Arjun Meghwal, who was also present at the listing, said the capital market's health is improving and cities should take the benefit of it and become self-sufficient in raising funds.

On the occasion, Maharashtra Chief Minister Devendra Fadnavis said creating infrastructure should be perceived as a business model and local bodies should look at proper options with a bankable proposition.

SEBI Chairman Ajay Tyagi said local bodies need to be more disciplined in maintaining their accounts and system to make the bonds issued by them trade-worthy.

"They should have a proper credit system in place to ensure investor confidence in repayment of bonds," the Sebi chief said.

SBI Chairman Arundhati Bhattacharya said such bonds will reduce the dependency of the municipal corporations and improve their fiscal position.

"SBI Capital is assisting many government agencies in raising funds through various instruments," she said.


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