GCC to issue municipal bonds to fund infra projects
ECONOMY & POLICY

GCC to issue municipal bonds to fund infra projects

To address the city's infrastructure needs, the Greater Chennai Corporation (GCC) has decided to issue municipal bonds, a model approved by the central government specifically for urban local bodies to raise funds from investors and commercial establishments. This initiative aims to empower local bodies to execute essential projects without depending on state or central grants.

As per the guidelines from the union finance ministry, urban local bodies can seek funding through bonds for well-prepared projects that have detailed project reports (DPR) to attract investors. Investors will provide funding at an interest rate that will be repaid by the local bodies. With GCC's Rs 4,500 crore annual revenue largely allocated to administration and salaries, and with government grants diminishing, the corporation has opted for this funding route.

The GCC plans to present this resolution at the upcoming council meeting, targeting to raise ?1,500 crore through bonds to finance major canal restoration projects worth Rs 80 crore, as well as road relaying and flyover construction.

GCC Commissioner J. Kumaragurubaran noted that subsidies are available for local bodies that choose grants. "Many large projects are stalled due to a lack of funds. As the city rapidly expands, we cannot wait for funding. The scheme has been successful in other corporations, including Hyderabad," he said.

For instance, Pune Municipal Corporation raised ?2,264 crore in 2017 for a 24X7 water supply project through ten bonds of ?200 crore each at an interest rate of 7.5%. The corporation is currently repaying these bonds through semi-annual payments, with the final installment due by 2027. Investors for Pune’s projects included insurers, state-owned banks, and private companies. Hyderabad successfully secured ?600 crore through various bonds for its strategic road development project.

Other corporations, including Bengaluru, Ludhiana, Madurai, and Ahmedabad, have also raised bonds ranging from ?20 crore to ?150 crore for road and water supply projects, with interest rates between 7% and 13%. Most have repaid these loans using property tax funds, capital funds, and state grants, often providing property tax bills and assets as guarantees. Some corporations have also issued non-guaranteed bonds.

However, former additional director of municipal administration and water supply department D.S. Sivasamy expressed concerns about the repayment capacity of corporations, citing high-interest burdens. "Corporations lack capital revenue, and property tax revenue is consumed by salaries. How will they repay the bonds? They need to maximize internal funds through better collection of entertainment taxes and increasing professional taxes," he added.

Your next big infra connection is waiting at RAHSTA 2025 – Asia’s Biggest Roads & Highways Expo, Jio World Convention Centre, Mumbai. Don’t miss out!

To address the city's infrastructure needs, the Greater Chennai Corporation (GCC) has decided to issue municipal bonds, a model approved by the central government specifically for urban local bodies to raise funds from investors and commercial establishments. This initiative aims to empower local bodies to execute essential projects without depending on state or central grants. As per the guidelines from the union finance ministry, urban local bodies can seek funding through bonds for well-prepared projects that have detailed project reports (DPR) to attract investors. Investors will provide funding at an interest rate that will be repaid by the local bodies. With GCC's Rs 4,500 crore annual revenue largely allocated to administration and salaries, and with government grants diminishing, the corporation has opted for this funding route. The GCC plans to present this resolution at the upcoming council meeting, targeting to raise ?1,500 crore through bonds to finance major canal restoration projects worth Rs 80 crore, as well as road relaying and flyover construction. GCC Commissioner J. Kumaragurubaran noted that subsidies are available for local bodies that choose grants. Many large projects are stalled due to a lack of funds. As the city rapidly expands, we cannot wait for funding. The scheme has been successful in other corporations, including Hyderabad, he said. For instance, Pune Municipal Corporation raised ?2,264 crore in 2017 for a 24X7 water supply project through ten bonds of ?200 crore each at an interest rate of 7.5%. The corporation is currently repaying these bonds through semi-annual payments, with the final installment due by 2027. Investors for Pune’s projects included insurers, state-owned banks, and private companies. Hyderabad successfully secured ?600 crore through various bonds for its strategic road development project. Other corporations, including Bengaluru, Ludhiana, Madurai, and Ahmedabad, have also raised bonds ranging from ?20 crore to ?150 crore for road and water supply projects, with interest rates between 7% and 13%. Most have repaid these loans using property tax funds, capital funds, and state grants, often providing property tax bills and assets as guarantees. Some corporations have also issued non-guaranteed bonds. However, former additional director of municipal administration and water supply department D.S. Sivasamy expressed concerns about the repayment capacity of corporations, citing high-interest burdens. Corporations lack capital revenue, and property tax revenue is consumed by salaries. How will they repay the bonds? They need to maximize internal funds through better collection of entertainment taxes and increasing professional taxes, he added.

Next Story
Real Estate

Vitizen Hotels Signs Deal at Manyata Tech Park

Vikram Kamats Hospitality, as part of its ongoing expansion in key metropolitan markets, announced that its material subsidiary, Vitizen Hotels, has signed a long-term lease agreement for a 45-key hotel property at Manyata Tech Park, Bengaluru.Strategically located in the city’s prominent IT hub, the property is well-positioned to serve corporate travelers, business professionals, and long-stay guests. The addition aligns with the company’s asset-light growth model, leveraging long-term leases to expand its footprint in high-demand urban markets.The hotel is expected to strengthen the comp..

Next Story
Infrastructure Transport

CONCOR Signs MoU with BPIPL to Operate Container Terminal at Bhavnagar Port

Container Corporation of India (CONCOR) has signed a Memorandum of Understanding (MoU) with Bhavnagar Port Infrastructure (BPIPL) on September 4, 2025, in New Delhi to operate and maintain the upcoming container terminal at the northside of Bhavnagar Port, Gujarat.BPIPL had earlier entered into an agreement with the Gujarat Maritime Board (GMB) in September 2024 for the port’s development. Under this arrangement, 235 hectares of land has been leased to BPIPL for 30 years, with provision for expansion by an additional 250 hectares.The new terminal is expected to significantly enhance logistic..

Next Story
Infrastructure Transport

Concord Launches India’s First Indigenous Zero-Emission Rail Propulsion

Concord Control Systems (CCSL), a leader in embedded electronics and critical rail technologies, has announced the development of India’s first fully indigenous zero-emission propulsion system, marking a significant step toward the country’s railway electrification and net-zero goals for 2030.Powered by Lithium Iron Phosphate (LFP) batteries and featuring a DC chopper-based drive, the propulsion system eliminates idling losses common in diesel engines, offering higher efficiency, lower costs, and zero emissions.What sets this innovation apart is its completely indigenous design. Except for..

Advertisement

Subscribe to Our Newsletter

Get daily newsletters around different themes from Construction world.

STAY CONNECTED

Advertisement

Advertisement

Advertisement

Talk to us?