Lucknow, Ghaziabad Municipal Bodies To Raise Funds Through Bonds
In a move that would help raise funds for infrastructural development in Ghaziabad and Lucknow, the Uttar Pradesh government on July 15 gave an approval to the municipal corporations of these cities to float bonds. This is the first time that municipal bonds will be floated in UP. With this the government plans to raise funds to the tune of Rs 350 crore, Rs 200 crore for the Lucknow Municipal Corporation (LMC) and Rs 150 for Ghaziabad Municipal Corporation (GMC).
The money raised through the bonds by the LMC will be used for improving the drinking water supply and the sewage system. On the other hand, the GMC will use these funds for the tertiary treatment of water for industrial usage.
These bonds will be issued for a duration of 10 years and the rate of interest on these will be from 8.5 per cent to 9 per cent. A team would be constituted to monitor the implementation of projects launched with the money raised through the municipal bonds, he said, adding that the permission from the Securities and Exchange Board of India (SEBI) had been obtained in this regard.
According to Principal Secretary (Urban Development) Manoj Kumar Singh, there would be no government guarantee for the bonds and the probability of institutional investors turning up for it was more. These bonds will help make the municipal corporations economically self-reliant.
The Pune Municipal Corporation in 2018 and the Ahmedabad Municipal Corporation in 2019 have raised Rs 200 crore each through municipal bonds.
Additionally, during the same meeting the state Cabinet also approved an amendment to the municipal corporation property tax rule to remove anomalies in the classification of properties. "Today's amendment puts a mall and a small shop in different categories for the purpose of property tax evaluation," Singh said.
"If a shop measuring 120 sq feet is operational in a residential area, it would have to pay 1.5 times the property tax," he added. Earlier, such a shopkeeper had to give five times the property tax prevailing in that area.
With inputs from Housing.com news