Current Affairs 2017 - June

India’s Largest Municipal Bond Programme Launched

Union Urban Development Minister Venkaiah Naidu has launched India’s largest municipal bond programme.

Salient Highlights

The Pune Municipal Corporation (PMC) became the first municipal corporation in the country to tap money through municipal bonds in 14 years. The AA+ rated PMC’s municipal bonds raised Rs 200 crore at 7.59 per cent rate at the Bombay Stock Exchange (BSE).

This is the first-ever mobilisation of debt capital by a municipal corporation on the BSE BOND platform. This will also be the first issuance since the publication of ‘Issue and Listing of Debt Securities by Municipalities Regulations, 2015’ by Securities and Exchange Board of India (SEBI).

The 10-year bonds will be used by the Pune Municipal Corporation (PMC) for a Rs 2,300-crore water project. The scheme is aimed at providing water 24×7 for all residents of Pune.

Pune Municipal Corporation (PMC) was assisted by the US Department of Treasury to create a debt policy. PMC has also planned to prepare a case study based on its experience and share it with other urban bodies to help them raise money from the bond markets.

Since the bonds do not have any guarantee from the state government, an escrow account has been created to deposit the funds for the comfort of investors.

Municipality Bonds

Municipality bonds can be issued by the city corporations to fund developmental projects. Institutional investors, as well as the public, can buy these bonds. The corporations can use the revenues earned from the developmental projects like Metro rail network to repay the interest and principal on these bonds. These municipal bonds have now been permitted for public offering by SEBI.

Municipal bonds have been in existence in India from the year 1997. Cities such as Ahmedabad, Bengaluru, Nashik and Madurai have already issued them. These bonds will help the city corporations to directly raise funds without the help of grants from the state governments or agencies such as World Bank.

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Uttarakhand and Haryana Declared Open Defecation Free States

Under the Swachh Bharat Mission Gramin (SBM-G), rural Uttarakhand and rural Haryana have been declared as the 4th and 5th Open Defecation Free (ODF) States of India. Already, Sikkim, Himachal Pradesh and Kerala, have been declared ODF.

As per the government sources, nationally the sanitation coverage has increased from 42% to over 64% since the launch of SBM. Uttarakhand has 13 districts, 95 blocks, 7256 gram panchayats and 15751 villages while Haryana has 21 districts, 124 blocks, and 6083 gram panchayats. All these have been declared as ODF. With this, the total number of ODF states in the country have increased to 5 covering more than 2 lakh villages and 147 districts across the country.

Background

The Swachh Bharat Mission (SBM) was launched in October 2014 to achieve universal sanitation coverage and to put focus on sanitation. The mission aims to achieve Swachh Bharat or make India clean by 2019, as a fitting tribute to the 150th Birth Anniversary of Mahatma Gandhi. The SBM consists of two sub-missions Swachh Bharat Mission (Gramin), implemented in rural areas, and Swachh Bharat Mission (Urban), implemented in urban areas. SBM-G seeks to eliminate open defecation in rural areas by improving access to sanitation by ensuring the use of toilets, besides their construction. It also seeks to generate awareness to motivate communities to adopt sustainable sanitation practices, and encourage the use of appropriate technologies for sanitation.

Open defecation is an important factor for causing various diseases like intestinal worm infections, diarrhoea, polio, hepatitis etc.

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