‘Working to help ULBs reach out to market for pvt funding’

Pune: The joint secretary of the Union finance ministry’s department of economic affairs, Solomon Arokiaraj, on Tuesday said the Asian Development Bank was working with G20 stakeholders to help urban local bodies (ULBs) access more private finance for infrastructure development, through instruments like municipal bonds.
He was in the city to attend a meeting of the G20’s Infrastructure Working Group (IWG).
The joint secretary said the next three meetings scheduled of the IWG across cities in India would build on the discussions in Pune, including building cities for the future in a sustainable manner. They would also incorporate recommendations of the Asian Development Bank (ADB), World Bank, and Organisation of Economic Cooperation and Development.
He said India’s nascent municipal bonds programme, which has yielded only around Rs 6,000 crore across India, could learn lessons from countries, such as Mexico, where tripartite agreements were signed between the federal and local governments, and the bond purchasers to increase fiscal discipline.
“Any lender will see the ability to repay, enough income sources, an operational surplus, and third-parties assessing creditworthiness of an ULB. A-rated bodies are able to access municipal bonds. The challenge is that several ULBs’ accounting systems are not double-entry-based accrual accounting, and are following legacy systems. Recently, the department of economic affairs held a workshop with ULBs on credit enhancement to help them prepare for the process to move to accounting systems that the markets want them to use. We have identified 35 municipal bodies that have a good credit rating and can actually go the market. Our action plan is to get them to the market,” he added.