India inks $400 million loan pact with ADB for urban infrastructure development

The Indian government has officially signed a $400 million policy-based loan agreement with the Asian Development Bank (ADB) headquartered in Manila. The loan is dedicated to supporting India's urban reform agenda, aiming to build high-quality urban infrastructure, enhance service delivery, and promote efficient governance systems.

The loan agreement for Sub-programme 2 of the Sustainable Urban Development and Service Delivery Programme was signed by Juhi Mukherjee, Joint Secretary of the Department of Economic Affairs, and Takeo Konishi, Country Director of ADB's India Resident Mission.

While Sub-programme 1, approved in 2021 with a financing of $350 million, laid the foundation with national-level policies and guidelines for improving urban services, Sub-programme 2 is geared towards supporting investment planning and reform actions at the state and urban local body (ULB) levels.

Juhi Mukherjee emphasised that the program aligns with the government's urban sector strategy, focusing on reforms to create livable cities and boost economic growth through inclusive, resilient, and sustainable infrastructure provisioning.

Sub-programme 2 specifically supports the initiatives of states and ULBs under the national flagship program, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0. The goals include universal access to water supply and sanitation, urban water security measures, and integrated urban planning reforms to control sprawls and foster planned urbanisation.

The comprehensive approach involves legal, regulatory, and institutional reforms, along with capacity building of ULBs and community awareness. The program also aims to incentivise cities to become creditworthy through various reforms, such as property tax enhancements, user charge improvements, and expenditure rationalisation.

By mobilising innovative financing methods like commercial borrowings, municipal bonds, sub-sovereign debts, and public-private partnerships, cities can bridge significant deficits in urban infrastructure investments. The integrated planning processes will also prioritise climate and disaster resilience, nature-based solutions, and financial sustainability, creating well-planned centers of economic growth.

(With PTI inputs.)