India, ADB Sign $400 Million Loan Pact to Enhance Urban Infrastructure

India, ADB Sign $400 Million Loan Pact to Enhance Urban Infrastructure

In a significant step towards enhancing urban infrastructure and governance, India has secured a $400 million policy-based loan agreement with the Asian Development Bank (ADB). This agreement aims to create high-quality urban infrastructure, improve service delivery, and promote efficient governance systems, as per a statement released by the finance ministry.

The program envisions comprehensive planning reforms to curb urban sprawl and foster systematic and planned urbanization through strengthening the entire legal, regulatory, and institutional framework. Sub-programme 1, approved in 2021 with a funding of $350 million, focused on establishing national-level policies and guidelines to improve urban services. The newly signed sub-programme 2 will support investment planning and reform initiatives at the state and urban local body (ULB) levels.

Juhi Mukherjee, Joint Secretary, Department of Economic Affairs, Ministry of Finance, and Takeo Konishi, Country Director of ADB’s India Resident Mission, signed the loan agreement for sub-programme 2. Mukherjee emphasized that the program aligns with the government’s urban sector strategy, prioritizing reforms to make cities livable and centers of economic growth by providing inclusive, resilient, and sustainable infrastructure.

“Sub-programme 2 supports reforms undertaken by states and ULBs to operationalize the national flagship program of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0, aiming for universal access to water supply and sanitation,” stated Konishi.

The sub-programme also supports other mission objectives, including ensuring urban water security by reducing water losses, recycling treated sewage for non-domestic use, rejuvenating water bodies, and maintaining sustainable groundwater levels.

ULBs will promote the modernization of building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning through transit-oriented development to transform cities into well-planned hubs of economic growth. These integrated planning processes will incorporate climate and disaster resilience, promote nature-based solutions, enhance the urban environment, and improve cities’ financial sustainability through additional revenue generation.

Cities will be encouraged to become creditworthy through various reforms aimed at boosting their revenues, such as property taxes and user charges, improving their efficiencies, and rationalizing their expenditures. This will significantly aid cities in mobilizing innovative financing mechanisms, such as commercial borrowings, municipal bond issuance, sub-sovereign debts, and public-private partnerships, to bridge the substantial gap in urban infrastructure investments, according to a finance ministry statement.