A senior Central government official on Thursday asked the local bodies of large cities to improve their performances by adopting best practices and reduce their dependence on government grants by becoming self-reliant by raising debt.
Large cities must come forward to raise funds through municipal bonds to fund their developmental projects, Union housing and urban affairs secretary Durga Shanker Mishra said.
"Since more than two decades, the dependence of cities on grants from states and Centre has increased, which is not the right approach. These cities need to reduce their dependence and become self-reliant. They should take advantage of the opportunity to sell municipal bonds," Mishra said.
So far eight cities have raised funds through bonds and another six have submitted their proposals, he said.
"The US treasury department has agreed to assist six cities, including Kakinada, Rajkot, Atalnagar, Faridabad, Ujjain and Gwalior to sell municipal bonds," he said.
A credit analysis of 469 cities showed that 163 of them have investment grade rating of BBB- while 36 have AA- rating of which eight have already sold bonds. These numbers are an eye opener and shows the lethargic attitude of our cities when it comes to fund raising, Mishra said.
He also noted that apart from the 100 notified smart cities, there are a few cities which are taking initiatives to become smart cities.