Maharashtra may allow civic bodies to raise money through municipal bonds

Mumbai: Chief Minster Devendra Fadnavis-led Maharashtra government had decided to allow the municipal corporations to raise money through municipal bond markets. “I will surely allow the municipal corporations to raise money through municipal bonds. But, my only concern is that they should spend the money well on the projects and not just raise the money,” said Fadnavis at a conference held on Transforming MMR into a Global, Financial, Commercial and Entertainment Hub at Mumbai suburban on Friday afternoon.

Fadnavis was replying to the issue raised by the Mumbai municipal commissioner Sitaram Kunte. The civic body should make big plans to improve the city’s infrastructure and spend the money well on it, he said. “As of now Rs 11,500 crores has been mobilised in financial year 2016 for various projects by Brihanmumbai Municipal Corporation (BMC) and that will surely benefit city in future. Municipal bond markets, which are popular in developed Western countries, are unfortunately not developed in our country. The previous government in Maharashtra also has not allowed the municipal corporations to raise the money through municipal bonds,” said Kunte.

He added that it creates an issue of garnering finance from public. But, the BMC has now set a spending target of Rs 15,000-20,000 crore to develop Mumbai. Civic officials said that the BMC had asked the previous government to allow raise funds around Rs 2,000 crore through the municipal bonds. “But, we were not allowed for whatever reasons,” said a senior civic official adding that the funds can contribute in big way to the city’s major infrastructure projects undertaken by the civic body. Meanwhile, Sebi, in December last year, has issued the draft regulations for the municipal bonds to help the Union government for its ‘smart cities’ program. It is planning to revive the municipal bonds to meet the financing needs of municipal infrastructure.