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India and ADB Ink $400 Million Deal for Urban Infrastructure and Governance

The Asian Development Bank (ADB) and the Indian government today inked a $400 million policy-based loan to further the government’s urban reform agenda, which includes building high-quality urban infrastructure, enhancing service delivery, and fostering effective governance systems.

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

Sub-programme 2 is supporting investment planning and reform actions at the state and urban local body (ULB) levels, while Sub-programme 1, which was approved in 2021 with financing totaling $350 million, established national-level policies and guidelines to improve urban services.

Following the loan agreement’s signature, Ms. Mukherjee declared that the initiative supports the Indian government’s urban sector strategy, which focuses on reforms aimed at transforming cities into livable, resilient, and sustainable hubs of economic growth by supplying inclusive, sustainable, and resilient infrastructure.

“Sub-programme 2 supports the reforms initiated by the states and the ULBs in operationalising the national flagship programme of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 targeted for universal access of water supply and sanitation,” said Mr. Konishi. “The sub-programme also supports other mission objectives for ensuring urban water security through reducing water losses, recycling treated sewage for non-domestic use, rejuvenation of water bodies, and maintaining sustainable ground water level.”

In addition, the program envisions capacity building for ULBs and community awareness as well as integrated urban planning reforms to curb urban sprawl and promote systemic and planned urbanization through strengthening the entire ecosystem of legal, regulatory, and institutional reforms.

To help cities become well-planned hubs of economic growth, ULBs will specifically support the modernization of building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning through transit-oriented development. By generating additional revenue, these integrated planning processes will improve the urban environment, support nature-based solutions, integrate climate and disaster resilience, and strengthen the financial sustainability of cities.

Additionally, through a variety of reforms aimed at increasing revenue streams like property taxes and user fees, as well as streamlining expenditures and improving efficiencies, cities will be encouraged to gain financial standing.

In order to close large gaps in their investments in urban infrastructure, this will greatly assist cities in mobilizing creative financing sources like commercial borrowings, the issue of municipal bonds, sub sovereign debts, and public-private partnerships.

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Source: PIB

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