The Central government has declared a special financial incentive of ₹26 crore for the Greater Hyderabad Municipal Corporation (GHMC), in recognition of the latter’s initiative to raise funds through issue of municipal bonds.
This declaration follows the Centre’s decision to reward up to 20 municipalities in the country every year, which resort to bond issue as a means of fund mobilisation.
A letter of appreciation was dispatched to the GHMC on Saturday from the Union Ministry of Urban Development and Housing, congratulating the corporation’s move to mobilise funds at the stock market, by attracting investors through its financial discipline.
PM’s suggestion
Under the guidance of the Minister for Municipal Administration and Urban Development K.T.Rama Rao, the GHMC has made a decision to garner funds for Strategic Road Development Plan (SRDP), by issue of municipal bonds worth ₹1,000 crore.
Of this, the first tranche of ₹200 crore were mobilised recently, making the GHMC only the second urban local body to issue bonds in recent times after the Pune Municipal Corporation.
The suggestion for fund mobilisation through municipal bond issue had been made by Prime Minister Narendra Modi to Mr. Rama Rao, during his visit to the city for inauguration of Hyderabad Metro Rail.
‘AA’ rating
Renowned credit rating agencies have given the corporation a rating of ‘AA’, translating into ‘Stable’, after studying the corporation’s economic status, tax collection, and financial discipline.
This has enhanced the credibility of the corporation at the stock market, which resulted in overwhelming response from bidders on February 14 this year, when GHMC conducted electronic bidding in Mumbai. Funds to the tune of ₹200 crore were generated at 8.9% in the bidding.
During the last 50 to 60 years, about ₹2,000 crore had been raised by municipalities and local bodies through bond issue, of which 10% was by the GHMC, a press statement of the corporation said.
