In a far-reaching move to give thrust to its urban reform agenda and enhance urban infrastructure, the Government of India has inked a $400 million policy-based loan with the Asian Development Bank (ADB). The loan aims to bolster the creation of high-quality urban infrastructure, improve service delivery, and promote efficient governance systems.
Under the agreement for Sub-programme 2 of the Sustainable Urban Development and Service Delivery Programme, Ms. Juhi Mukherjee, Joint Secretary of the Department of Economic Affairs, Ministry of Finance, represented the Government of India, while Takeo Konishi, Country Director of ADB’s India Resident Mission, signed on behalf of the ADB.
While Sub-programme 1, approved in 2021 with a financing of $350 million, focused on establishing national-level policies and guidelines to enhance urban services, Sub-programme 2 will support investment planning and reform actions at the state and urban local body (ULB) levels.
Ms. Mukherjee emphasized that the program aligns with the Government of India’s urban sector strategy, focusing on urban reforms to make cities more livable and potent centers of economic growth through the provision of inclusive, resilient, and sustainable infrastructure.
GoI and ADB loan to support urban services
Mr. Konishi highlighted that Sub-programme 2 backs the reforms initiated by states and ULBs in operationalizing the national flagship program, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0. This initiative aims for universal access to water supply and sanitation and supports other mission objectives, including urban water security, water conservation, and sustainable groundwater management.
The comprehensive program envisions integrated urban planning reforms to control urban sprawls, foster planned urbanization, and enhance legal, regulatory, and institutional frameworks. Urban local bodies (ULBs) will play a crucial role in modernizing building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning through transit-oriented development.
Furthermore, the program incentivizes cities to become creditworthy through reforms in revenue enhancement, property taxes, user charges, and expenditure rationalization. This strategic approach aims to empower cities to mobilize innovative financing, such as commercial borrowings, municipal bonds, sub-sovereign debts, and public–private partnerships, addressing significant deficits in urban infrastructure investments.
The integrated planning processes will prioritize climate and disaster resilience, nature-based solutions, and overall improvement of urban environments, fostering cities’ financial sustainability through the generation of additional revenues.