ANNOUNCEMENTS
Debt-based financing has been conceived by many as a definitive solution to fund urban infrastructure owing to shortfalls in municipal budgets in India. Even though several urban policies and programmes in India have emphasized on the use of debt instruments to fund infrastructure, the same has not been used by many municipalities attributed mainly to week cashflows, fiscal deficits and stringent regulatory framework. With the advent of new urban missions, institutional framework enabling debt based urban infrastructure financing has seen changes over the years. The study tried to identify the bottlenecks in the process of issuance of municipal bonds in India with a specific case of Pune Municipal Bond so as to come up with recommendations to ease this process. The study of Pune Municipal Bond and extensive review of literature revealed several challenges faced by municipalities in the bond issuance process. The case of Pune Municipal Bond illustrated that the duration of preparatory activities before the approvals took considerable amount of time as compared to the six approvals which took around 1 to 2 months. Moreover, the success of bond issuance by Pune Municipal Corporation was directly related to the strong political and administrative support coupled with good governance which helped the municipality to undertake reforms and improve its financial condition over the years. The extensive review of literature divulged that there is impetus on the need for municipal bonds to fund large infrastructure project, but the same did not translate well into actions due to the tight regulatory frameworks at Central level and less thrust of policies by the state level governments in India. Thus, the municipal bond market in India has been largely untapped, but it has huge potential to achieve the large requirement for investment on urban infrastructure and service provision as estimated by the High-Powered Expert Committee. The most pertinent challenge which still remains is addressing the weak fundamentals or the credit worthiness of municipalities.
Keywords- municipal bond, urban infrastructure financing, Pune, debt financing
