PremiumArokiaraj pointed out that the challenge with municipal bonds in India has been that several urban local bodies do not follow double entry-based accrual accounting and are still in the legacy system.
NEW DELHI : The department of economic affairs has identified 35 municipalities with credit ratings good enough for them to access the markets for financing needs, and the Union government is working on an action plan for that, Solomon Arokiaraj, joint secretary, department of economic affairs said on Tuesday.
He was speaking at a briefing post the conclusion of a two-day infrastructure working group meeting of the G20 in Pune.
The working group held discussions on a range of topics related to infrastructure investments, such as establishing infrastructure as an asset class, supporting high quality infrastructure investment, and identifying financing sources for such projects.
Arokiaraj pointed out that the challenge with municipal bonds in India has been that several urban local bodies do not follow double entry-based accrual accounting and are still in the legacy system.
“During a workshop in Delhi, where credit enhancement was a major theme, it was identified that ULBs need to prepare themselves and make accounting changes to be able to access the market... it is a 1-1.5-year process to get their books in order...they should be able to show revenue surpluses and demonstrate that they have enough income sources to service debt," said Arokiaraj.
“We identified 35 municipalities across the country with good credit ratings that could actually go to the market," he added.
During the two-day meeting, Mexico shared its success-story with respect to municipal bonds, how it switched from government backed-municipal bonds to Trust-backed bonds, making the bodies efficient.
The first of the four meetings of the infra working group had detailed discussion on five agenda items including- India’s flagship priority -‘Financing of Cities of Tomorrow: Inclusive, Resilient and Sustainable’. The theme focuses on various facets of making cities the economic centres of growth, financing urban infrastructure, building future-ready urban infrastructure, directing fiscal investments for unlocking private financing for energy-efficient and environmentally sustainable infrastructure, and mitigating social imbalances..
“We have a productive two-day engagement, there was a presentation by India on priorities of the infra group and the issues to be worked on this year…there was also a discussion of Cities of tomorrow…how to make members engaged on that really well and gave inputs," said Arokiaraj.
The workshop saw participation of 64 delegates from 18 member countries that were physically present and there was representatives from eight guest countries and eight international organisations, who shared inputs and suggestions.
The next meeting is scheduled in March in Vizag, and the following one in June, and the final one in October.
“The fifth area is about how cities have to plan dynamically with people centric approach.. Every plan should be people centric. We deliberated on that in detail," said Arokiaraj.
The theme of the G20 Indian Presidency is- One Earth, One Family, One Future.