India, ADB sign $400-million loan pact to create urban infra

New Delhi: India on Monday signed a $400 million policy-based loan agreement with the Asian Development Bank (ADB) to create high-quality urban infrastructure, improve service delivery, and promote efficient governance systems, according to a statement from the finance ministry.

The programme also envisages integrated planning reforms to control urban sprawls and foster systemic and planned urbanisation through enhancing the entire ecosystem of legal, regulatory, and institutional reforms.

The sub-programme 1, approved in 2021 with the financing of $350 million, established national-level policies and guidelines to improve urban services, while the latest sub-programme 2 supports investment planning and reform actions at the state and urban local body (ULB) levels.

The loan agreement for the sub-programme 2 was signed between Juhi Mukherjee, joint secretary, department of economic affairs, ministry of finance, and Takeo Konishi, country director of ADB’s India resident mission.

Mukherjee said the programme supports the government’s urban sector strategy with a focus on reforms aimed at making cities livable and centres of economic growth through the provisioning of inclusive, resilient and sustainable infrastructure.

“Sub-programme 2 supports the reforms initiated by the states and the ULBs in operationalising the national flagship programme of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 targeted for universal access of water supply and sanitation,” said Konishi.

The sub-programme also supports other mission objectives for ensuring urban water security through reducing water losses, recycling treated sewage for non-domestic use, rejuvenation of water bodies, and maintaining sustainable groundwater levels, the release said.

ULBs will promote modernisation of building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning through transit-oriented development to help cities become well-planned centres of economic growth. Such integrated planning processes will incorporate climate and disaster resilience, promote nature-based solutions, improve urban environment, and improve cities’ financial sustainability through generation of additional revenues.

Cities will be incentivised to become creditworthy through various reforms on enhancing their revenues such as property taxes and user charges, improve their efficiencies and rationalize their expenditures.

This will substantially help cities to mobilise innovative financing such as commercial borrowings, issuance of municipal bonds, sub sovereign debts, and public–private partnerships to bridge significant deficits in urban infrastructure investments, a finance ministry statement said.