16 Sep :The Urban Local Bodies will need to leverage the funds available under Jawaharlal Nehru National Urban Renewal Mission (JNNURM) in order to access alternate sources of funding and also take necessary steps to improve their own financial health.
This was stated by the Secretary, Urban Development, Dr. M. Ramachandran while inaugurating a Workshop on “Financial Leveraging for Urban Infrastructure Investments in the context of JNNURM” here today. The Workshop is jointly organized by Ministry of Urban Development and the Union Bank of India. The Secretary mentioned that the available public funding will not be sufficient to cover the infrastructure investment requirements for urban India. He informed that project to the tune of Rs.32,232.32 crores have been approved by the government with an Additional Central Assistance (ACA) commitment of Rs.15,651.65 crores under the urban infrastructure and governance Sub-Mission of JNNURM.
The Secretary added that as compared to the central support for urban infrastructure development before the commencement of the Mission, these figures seem high. But in the context overall capital investment requirements in the 63 Mission Cities as well as the urban centres across the country, the scale of investment is clearly inadequate to meet the requirements. Highlighting the capital investment requirements of the 63 Mission Cities he said that funds to the tune of Rs. 335,000 crores will be required to cater to the basic infrastructure needs of 63 Mission Cities for the 7 year period. Of this, approximately Rs.277,000 crores, accounting for 82% of the capital investment requirements will be required for the Urban Infrastructure & Governance Sub-Mission. He further stated that the Urban Local Bodies in the 63 Mission Cities will have to invest around Rs.98000/- crores by way of their contribution under the Mission, (based on the funding pattern of the investments, which are dependent on the city category). Therefore, taken into account the investment requirements for all the 5,161 urban centres across the country, a capital investment of around Rs.800,000/- crores is required as per the estimates.
The Secretary disclosed that the rating exercise undertaken by the 4 credit rating agencies in North India reveals that out of the 22 ULBs where the rating exercise is complete, only one ULB, Chandigarh Municipal Corporation has achieved a rating of A+, and only 8 ULBs have achieved an investment grade rating of BBB-. Expressing his concern, the Secretary said that the credit rating needs to be accorded due importance by the Urban Local Bodies, as the long term objective of the Mission is to create financially sustainable institutions of local self governance. He advised that a raft of measures like strengthening institutional capacity, improving revenue mobilization, focus on public private partnership and systematic devolution of funds are necessary to improve the institutional capacity and financial position of the ULBs. He emphasized that the Urban Local Bodies will need to look beyond their own sources of revenue and leverage, available sources of financing to augment their corpus of investible funds.
The credit rating exercise initiated by the Ministry of Urban Development and carried out under the aegis of the Mission is a crucial step in enabling the ULBs to be fully cognizant of their overall financial position and credit worthiness. This will in turn enable the ULBs to access various avenues of institutional finance and also to undertake revenue enhancement as well as cost reduction measures to strengthen their overall financial standing.
This is the fourth and final regional seminar organized by the Ministry of Urban Development in collaboration with the Union Bank of India, the first three being held in Bangalore, Mumbai and Calcutta.