Lok Sabha Question No. 4560 (UNSTARRED), answered on 2025-03-27
Subject: Promotion of Infrastructure Bonds to Fund Urban Infrastructure
Ministry: HOUSING AND URBAN AFFAIRS
Asked by: Shri Sukanta Kumar Panigrahi

## MINISTRY OF HOUSING AND URBAN AFFAIRS

## GOVERNMENT OF INDIA LOK SABHA

## UNSTARRED QUESTION NO. 4560

TO BE ANSWERED ON MARCH 27, 2025

## PROMOTION OF INFRASTRUCTURE BONDS TO FUND URBAN

## INFRASTRUCTURE

- NO. 4560.      SHRI SUKANTA KUMAR PANIGRAHI:

Will  the  Minister  of  HOUSING  AND  URBAN  AFFAIRS  be  pleased  to state:

- (a) the details of the measures taken/being taken by the Government to promote the issuance and utilization of infrastructure bonds to fund urban infrastructure projects;
- (b) whether  there  are  any  specific  schemes  or  policies  in  place  to encourage private sector participation in funding urban infrastructure through these bonds and if so, the details thereof;
- (c) the  steps  taken/being  taken  to  ensure  that  the  proceeds  from infrastructure bonds are efficiently allocated to critical urban infrastructure projects, such as affordable housing, water supply, and transportation;
- (d) whether  the  Government  has  considered  for  providing  any  tax incentives or other financial benefits to the investors of infrastructure  bonds  to  make  them  more  attractive  and  if  so,  the details thereof; and
- (e) whether there  are  any  specific  success  or  challenges  faced  in  the implementation  of  infrastructure bonds  for urban  infrastructure funding in the past and if so, the details thereof?

## ANSWER THE MINISTER OF STATE IN THE MINISTRY OF HOUSING AND URBAN AFFAIRS

## (SHRI TOKHAN SAHU)

(a) to (e): Atal Mission for  Rejuvenation  and  Urban  Transformation (AMRUT),  launched  on  25  June  2015,  has  reform  agendain  various categories  including  credit  rating  of  the  cities  and  floating  municipal bonds. Credit rating work for 483 cities have been awarded and completed in 468 cities. Out of 468 cities, 162 have received Investible Grade Rating (IGR)  i.e.    rating  B-  and  above,  including  34  cities  spread  across  12 States/UTs with rating of A- and above.

AMRUT 2.0, launched on 01 October 2021, also aims at Credit rating  of Tier-2  cities  (population  50,000  to  99,999)  and  enhancing  the  credit worthiness of AMRUT Urban Local Bodies(ULBs). Incentive for issuance of municipal bonds has been continued under AMRUT 2.0.

Ministry of Housing & Urban Affairs has been providing incentive to ULBs for  issuance of Municipal Bonds at the rate of ₹13 crore per ₹100 crore worth  of  bonds  issued  with  maximum  incentive  of  ₹26  crore  per  ULB. Second time eligibility is only for issuance of Green bonds at the rate of ₹10  crore  incentive  per  ₹100  crore  of  bonds  issued,  restricted  to  a maximum incentive of ₹20 crore.

Generally, Municipal bonds are issued for Urban Infrastructure Projects. So far, ₹4,984 crore has been raised through issuance of Municipal Bonds & Green  bonds  for  upgrading  urban  infrastructure  by  13  ULBs  namely, Ahmedabad (Municipal bond & Green Bond), Amravati, Bhopal, Ghaziabad (Green bond), Hyderabad, Indore (Municipal bond & Green Bond), Lucknow, Pimpri Chinchwad, Pune, Rajkot, Surat, Vadodara (Municipal bond & Green Bond) and Visakhapatnam and incentive, ₹331.83 crore has been released. The  City/ULB  wise  details  of  Municipal  Bonds  raised  and  incentive released are at ANNEXURE.

Under AMRUT 2.0, Projects for 10% of allocation to million plus cities will be mandatorily implemented in Public Private Partnership (PPP) mode. 22 PPP  projects  costing  ₹6,816.64  crore  have  been  approved  so  far  in  the million plus cities.

To  give  further  boost  to  the  urban  infrastructure  sector,  in  the  Budget 2025-26,  Government  has  announced  setting  up  of  an  Urban  Challenge Fund  of  ₹1  lakh  crore  for  augmentation/  upgradation/  retrofitting  and improving  infrastructure  in  urban  areas  through  bankable  projects.  This fund will finance up to 25 per cent of the cost of bankable projects with a stipulation that at least 50 per cent of the cost is funded from bonds, bank loans,  and  Public  Private  Partnership  (PPP).Financial  management  and Credit  rating  of  many  ULBs  needs  to  improve  to  access  the  market finance.

ANNEXURE REFERRED TO IN REPLY TO PART (a) to (e) OF UNSTARRED QUESTION  NO.  4560  REGARDING  'PROMOTION  OF  INFRASTRUCTURE BONDS TO FUND URBAN INFRASTRUCTURE', DUE FOR ANSWER IN THE LOK SABHA ON 27MARCH, 2025.

## STATUS OF MUNICIPAL BONDS ISSUED BY AMRUT CITIES

| S. No.   | Name of ULB            | Credit Rating   | Amount Raised (In Cr.)   |   Incentive Issued (In Cr.) |
|----------|------------------------|-----------------|--------------------------|-----------------------------|
| 1        | Amaravati              | AA-             | 2,000                    |                       26    |
| 2        | Gr Vizag               | AA              | 80                       |                       10.4  |
| 3        | Ahmedabad              | AA+             | 200                      |                       26    |
| 4        | Surat                  | AA+             | 200                      |                       26    |
| 5        | Vadodara               | AA+             | 100                      |                       13    |
| 6        | Bhopal                 | AA              | 175                      |                       22.75 |
| 7        | Indore                 | AA+             | 140                      |                       18.18 |
| 8        | Pune                   | AA+             | 200                      |                       26    |
| 9        | Gr Hyderabad           | AA              | 495                      |                       26    |
| 10       | Lucknow                | AA              | 200                      |                       26    |
| 11       | Ghaziabad (Green bond) | AA              | 150                      |                       19.5  |
| 12       | Indore (Green bond)    | AA+             | 244                      |                       20    |
| 13       | Pimpri Chinchwad       | AA+             | 400                      |                       26    |
| 14       | Ahmedabad (Green bond) | AA+             | 200                      |                       20    |
| 15       | Vadodara (Green bond)  | AA+             | 100                      |                       13    |
| 16       | Rajkot                 | AA              | 100                      |                       13    |
|          | Total                  |                 | 4,984                    |                      331.83 |