Govt may mobilise funds from market for urban schemes

New Delhi: For the first time, the ministry of housing and urban affairs is planning to mobilise funds from the market to finance its mega urban schemes, including Housing for All and Smart City.

To ensure fund flow for infrastructure projects, the ministry will opt for public-private participation (PPP) model, which would be the backbone for resource mobilisation. The Union ministry and state governments will set up a special purpose vehicle (SPVs) for mega infrastructure projects to get funds from the financial institutions or open markets. The municipal bonds would also be raised by municipal bodies under smart cities to raise funds from the markets. Pune has already mobilised Rs 200 crore through the bonds.

Minister of state (independent) Hardeep Singh Puri said on Friday that the Centre is planning market borrowings to incentives speedy execution of urban infrastructure projects under various new urban missions launched over the last two years. The ministry has also prepared an action plan to enable 500 AMRUT cities acquire credit ratings so as to enable them go for issue of municipal bonds to mobilise resources for infrastructure projects.

Besides, new urban planning tools like transit oriented development, value capture financing and land pooling is being implemented to ensure flow of funds. The minister, however, did not specify the amount the government was looking to mobilise from the market.

The Modi government has committed assistance of around Rs 3 lakh crore under various missions, including smart cities and housing for all by 2022.

Besides, around Rs 1.80 lakh crore would be required as central assistance for the Pradhan Mantri Awas Yojana-Urban (PMAY-U) by 2022, considering the projection of over one crore affordable houses to be built in the next five years.