Karnataka budget: Bengaluru civic bodies to issue municipal bonds to fund development works

Karnataka CM Siddaramaiah

• Bengaluru corporations to issue municipal bonds for projects
• ₹7,000 crore allocated for Bengaluru's 2025-26 development
• Revised Master Plan 2041 to be implemented by end of 2027

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Karnataka CM Siddaramaiah on March 6 announced in the state budget that five city corporations under Greater Bengaluru Authority (GBA) will raise funds for development projects by issuing municipal bonds based on their balance sheets.

Municipal bonds - commonly known as muni bonds - are debt instruments issued by urban local bodies to mobilise funds for public infrastructure projects. These funds can be used for developing roads, sewage and sanitation systems, water supply, hospitals, schools and other civic infrastructure. Since these bonds are issued by government-backed municipal bodies, they are generally considered relatively safe investment instruments.

The municipal bond market in India emerged in the late 1990s, with Bengaluru Municipal Corporation becoming the first civic body to issue a municipal bond in 1997. However, market gained momentum only in the last decade after the Securities and Exchange Board of India (SEBI) introduced a detailed regulatory framework in 2015 governing the issuance and trading of municipal bonds.

Since then, several municipal corporations across the country have tapped the bond market to fund urban infrastructure. Cities such as Chennai, Pune, Indore, Bhopal, Greater Hyderabad, Ahmedabad, Lucknow, Ghaziabad, Vadodara, Pimpri-Chinchwad, Rajkot, Agra and Prayagraj have raised funds through municipal bonds. According to SEBI data, around Rs 3,134 crore has been raised through municipal bonds between June 2017 and May 2025.

Bengaluru's evolution

Highlighting the government’s vision for the city, Siddaramaiah said Bengaluru has evolved from the era of Nadaprabhu Kempegowda to becoming a global start-up hub, and government’s primary objective is to transform it into the world’s most liveable city.

The CM also outlined several infrastructure initiatives undertaken in the 2025-26 financial year. Development of ward roads and related infrastructure across the five Bengaluru city corporations has been taken up at a cost of Rs 1,255 crore, while white-topping works covering 158 km of roads have been undertaken at a cost of Rs 1,700 crore.

Arterial and sub-arterial road development works have been implemented at a cost of Rs 1,936 crore. In addition, a project to develop Outer Ring Road stretch between Silk Board Junction and KR Pura Metro Station into a global-standard corridor is being taken up at an estimated cost of Rs 450 crore.

The government has also invited tenders for upgrading primary stormwater drains and lake development works at an estimated cost of Rs 273 crore.

"To strengthen governance and improve service delivery, the state government has established Greater Bengaluru Authority and five city corporations aimed at ensuring transparent, participatory and citizen-friendly administration" he said.

"The state government increased the grant for Bengaluru’s development from Rs 3,000 crore to Rs 7,000 crore in 2025-26, and the same allocation will continue in the current financial year" he said.

Looking ahead, he said, government plans to undertake white-topping of more than 450 km of roads over the next three years at an estimated cost of Rs 3,000 crore. It also proposes to beautify 175 junctions, upgrade 500 km of footpaths and construct 100 skywalks during the same period using the internal resources of the Bengaluru city corporations.

Further, stormwater drain development and upgradation works under World Bank-assisted Water Security and Disaster Resilience Programme will be implemented at an estimated cost of Rs 2,000 crore.

The government also announced that a Revised Master Plan 2041 (RMP-2041) for Bengaluru will be implemented by the end of 2027 to ensure sustainable land-use planning and future growth. Additionally, a Comprehensive Mobility Plan (CMP) for the city will be prepared within six months.