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Despite being one of India’s longest-running development finance pilots, India’s municipal bond (muni-bond) market has remained shallow. Since the early muni-bond issuances in the mid-1990s, there were over 20 such issuances (including a few pooled bond issuances) that collectively raised nearly Rs 1,500 crore, modest relative to India’s burgeoning urban investment needs. Even cities that did tap capital markets mostly did so in the form of one-off “testing-the-water” issuances rather than as a resource mobilisation stream to address financing gaps sustainably.
Given this backdrop, the spurt in muni-bond issuance in recent years — over Rs 1,400 crore by seven cities since 2015 — is a green shoot that needs to be nurtured a bit differently, to secure dramatically better outcomes in
