Rethinking the Concept of Municipal Bonds to Improve Urban Governance in India

Abstract

The pace of urban development in India has been slow, unorganised and unorderly as a result of inadequate planning and implementation of projects, mismanagement and misutilisation of funds, bureaucracy in the decision-making process and the reliance of urban local bodies on traditional forms of financing such as taxes and government grants. These factors not only restrict effective urban governance and development, but also create several dilemmas for comparatively modern and efficacious forms of urban financing. A perfect example of this is the unattractiveness and underutilised potential of municipal bonds for urban financing despite the fact that it was introduced in India in the year 1997. In pursuance of the above, this article aims to identify the problems associated with urban financing through municipal bonds and also makes an attempt to provide solutions which will not only help in creating a more reliable and effective form of urban financing for urban local bodies but also improve urban governance and permit the general public to invest in urban infrastructure development activities. JEL Classification: K220, R510