Home News KTR preparing local bodies for bonds market

KTR preparing local bodies for bonds market

Presently, the GHMC is the only urban local body in Telangana which is raising funds through bonds. Rama Rao is trying to get ratings for 12 other municipal corporations and eight municipalities in Telangana. (Photo: twitter @MinisterKTR)

Hyderabad: It is not just the state government, but even local bodies are now vying to issue bonds to raise funds from capital markets for taking up development works in municipalities and municipal corporations. The need to raise funds through bonds arose for local bodies after the state government imposed cuts in budgetary allocations due to fund crunch.

Local bodies are struggling to take up development works due to paucity of funds, as most funds accrued through various tax collections, user charges and grants from the state government and Finance Commission fail to meet even salaries and operational expenditure of local bodies. The long-pending problems of poor roads, drainage systems and flooding in urban areas could not be resolved due to fund crunch, causing severe hardships to people.

 

To overcome fund crunch for urban local bodies, minister for municipal administration and urban development K. T. Rama Rao is on a mission to raise funds from capital markets by issuing bonds. Rama Rao has been vigorously pursuing the issue with independent rating agencies like Crisil, ICRA and Fitch, among others.

These ratings are mandatory to issue bonds because investors will not come forward to purchase bonds unless they are rated by these independent agencies. Higher the rating, better the chances of investors competing to purchase bonds.

 

However, rating agencies have a stringent set of parameters to give ratings to local bodies. They take into account the financial discipline of local bodies, percentage of tax collections vis-à-vis targets, administrative reforms, long-term plans for development, revenue estimates, economic development, funds utilisation, and infrastructure creation, among others.

Presently, the GHMC is the only urban local body in Telangana which is raising funds through bonds. Rama Rao is trying to get ratings for 12 other municipal corporations and eight municipalities in Telangana.

 

The 12 corporations are Karimnagar, Nizamabad, Warangal, Khammam, Ramagundam, Badangpet, Bandlaguda jagir, Meerpet-Jillelaguda, Boduppal, Peerjadiguda, Jawaharngar and Nizampet. The eight municipalities are Mahabubnagar, Suryapet, Jagtyal, Siddipet, Kamareddy, Adilabad, Nalgonda and Miryalaguda.

This article is auto-generated by Algorithm Source: www.deccanchronicle.com

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