The Vadodara Municipal Corporation (VMC) plans to raise Rs 100 crore by selling bonds to fund its various infrastructure projects.
Vadodara becomes the second city in Gujarat after Ahmedabad early this month, and the sixth municipality in the country after Pune, Indore, Bhopal and Hyderabad (two issuances since 2018) to tap the bond market to raise funds.
Municipal bonds have been gaining momentum in recent years after their respective governments have been promoting municipalities to tap the bond market to help them bring in transparency and create budgetary discipline.
"We plan to raise Rs 100 crore by selling municipal bonds and the proceeds from the issue will be used as our contribution to the Atal Mission for Rejuvenation and Urban Transformation project, which focuses on setting up modern infrastructure," Vadodara municipal commissioner Ajay Bhadoo told reporters Thursday after presenting the budget for FY20 without offering more details like the timing etc.
Vadodara Municipal Corporation was created in April 1966 after converting the Baroda Borough Municipality.
"We have a strong track record of raising money and paying back without any delays and defaults," Bhadoo claimed. He announced a Rs 3,554-crore budget for FY20 which focuses on infrastructure, drinking water, drainage, traffic, pollution, and making the city cleaner.
He specifically cited traffic, the Vishwamitri river pollution and cleanliness apart from augmenting drinking water supply as major challenges. He did not propose any new levy.
"We have addressed these issues in the budget and the money needed for the projects will be met through a Rs 300- crore loan for which approval has been received from the state.
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