The Union government is set to approach the World Bank and the Asian Development Bank (ADB) for a loan of £500 million and £1 billion each for 2

The reason for the mission garnering such wide-spread interest is owing to the fact that it opens up India’s until now largely-closed urban infrastructure and services sector to private investments. C R Sasikumar

Ministry officials said that similar proposals will also be sent for procuring funding from the BRICS New Development Bank, China-led Asian Investment Infrastructure Bank, Japan International Cooperation Agency (JICA), Agence Française de Développement (AFD) and Germany’s GIZ and KfW Development Bank. “We are yet to decide on the amount to be sought,” said the official.

Ashok Srivastava, senior project officer (Urban ) for the Asian Development Bank told The Indian Express that if the finance ministry approves the proposal, it will be the bank’s highest funding to India’s urban sector. “The states will have to bear the foreign exchange risk but our interest rates will not be more than one percent,” said Srivastava. On the issue of facing resistance from urban local bodies (ULBs) owning to the conditionality imposed by multilateral agencies, World Bank’s lead urban specialist Barjor Mehta said, “These are misguided perceptions. Most of our safeguards are citizen-centric.” He said that AMRUT and Swachh Bharat, with its focus on water, green open spaces, transport and sanitation, forms the base of the government’s comprehensive urban agenda and Smart Cities is the innovation. “The World Bank is very keen to partner the Centre, state governments and cities that are able to meet these challenges,” said Mehta adding that the tenor of the loan could be up to 20 years.

The World Bank, ADB, AFD, KfW, JICA, in addition to a host of other agencies, will also provide technical assistance to the cities in preparation of their Smart City plans as well as on procurement of consultants. These include UK government’s Department for International Development, UN Habitat, United Nations Industrial Development Organization and US Trade and Development Agency.

Increased space for private sector in urban infra and service provision

The reason for the mission garnering such wide-spread interest is owing to the fact that it opens up India’s until now largely-closed urban infrastructure and services sector to private investments.

“The Centre and state government-ULB funding for every city will be Rs 1,000 crore over a five-year period. ULBs’ capacity for self-funding has been reduced greatly with major revenue sources such as octroi abolished. Every city is expected to raise another Rs 4,000 crore through a range of available options including public-private partnerships,” said an official. Several services, which were historically handled by urban local bodies or planning agencies, will now be handed over to private players which might be involved in everything from the construction to the operations stage.