ADB approves $400 million loan for urban services in India

New Delhi: The Asian Development Bank (ADB) has approved a $400 million policy-based loan to India, aimed at backing urban reforms by way of boosting infrastructure quality, providing assured public services and efficient governance systems, the multilateral development bank said in a statement.

The loan will be under ADB's Sustainable Urban Development and Service Delivery Program’s Subprogram 2, which supports investment and reforms at the state and urban local body (ULB) levels.

“India has recognized the potential for cities to be centres of economic growth and has emphasized the need to make cities livable through inclusive, resilient, and sustainable infrastructure, which is also in line with ADB Strategy 2030,” said Sanjay Joshi, ADB's principal urban development specialist.

“The national flagship program of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 is targeted for universal access of water supply and sanitation and to ensure urban water security through reducing water losses, recycling treated sewage for non-domestic use, rejuvenation of water bodies, and maintaining sustainable groundwater levels," Joshi added.

In October last year, Prime Minister Narendra Modi-led Bharatiya Janta Party (BJP) government greenlit the AMRUT 2.0, allocating an indicative ₹2.77 trillion, with the central government's share being ₹76,760 crore for five years till FY26.

The mission is aimed at making Indian cities ‘water secure’. The scheme entails offering affordable water and sanitation services, advancing functional tap connections across households, and emphasizing water conservation, among other things.

"The program also envisages integrated urban planning reforms to control urban sprawls and foster systemic and planned urbanisation through enhancing the entire ecosystem of legal, regulatory, and institutional reforms along with capacity building of ULBs and community awareness," the ADB statement said.

"Specifically, ULBs will promote modernisation of building bylaws, land pooling, an urban agglomeration, and comprehensive urban mobility planning through transit-oriented development to help cities become well-planned centres of economic growth," it added.

ADB expects cities to become credit-worthy through various revenue-enhancing reforms, such as property taxes and user charges, which will improve efficiencies and rationalise expenditures.

These measures will substantially help cities mobilise innovative financings such as commercial borrowings, issuance of municipal bonds, sub-sovereign debts, and public–private partnerships to bridge the significant deficit in urban infrastructure investments.

"ADB will continue to provide knowledge and advisory support to the Ministry of Housing and Urban Affairs in program implementation, including monitoring and evaluation," the ADB said.

The bank will focus on lower-income states, which require support in capacity building, institutional strengthening, and policy reforms, it added.