The Uttar Pradesh Government recently approved the idea to float municipal bonds to raise funds for both the Lucknow and Ghaziabad civic bodies.
This decision is taken recently in the meeting of state cabinet that was presided over by state Chief Minister Yogi Adityanath. The State Government will try to raise Rs. 200 crores for the Lucknow Municipal Corporation and Rs. 150 crores for the Ghaziabad Municipal Corporation by this move from the market.
The Lucknow Municipal Corporation will use this fund to improve the drinking water supply and the sewage system.
Manoj Kumar Singh, Principal Secretary (Urban Development) said that this is for the first time that municipal bonds were being floated in the state.
Similarly, the Ghaziabad Municipal Corporation will make use of this fund for the tertiary treatment of water for industrial usage. Singh also said this was a market-oriented experiment and an attempt to make the working of the municipal corporations more professional. The municipal bonds will have a duration of 10 years and the rate of interest on these will be from 8.5% to 9%.
Singh further said that a team will be formed to track the implementation of projects launched with the money raised via the municipal bonds, and also informed that the permission from the Securities and Exchange Board of India (SEBI) had been obtained in regard with the same.
A presentation was also given to the Bombay Stock Exchange in this regard. The principal secretary then said that there would be no government guarantee for the bonds and the probability of institutional investors turning up for it was more.
He was quoted saying that the aim behind it is to make the municipal corporations economically self-reliant.
The UP State cabinet also sanctioned an amendment to the municipal corporation property tax rule for the removal of anomalies in the classification of properties. Singh also said that today’s amendment puts a mall and a small shop in different categories for the purpose of property tax evaluation. If a shop measuring 120 sq ft is operational in a residential area, it would have to pay 1.5 times the property tax.