The central government on Monday signed a USD 400 million policy-based loan with the Manila-based Asian Development Bank (ADB) to support its urban reform agenda to create high-quality urban infrastructure, improve service delivery, and promote efficient governance systems.

The signatories to the loan agreement for sub-programme 2 of the Sustainable Urban Development and Service Delivery Programme were Juhi Mukherjee, Joint Secretary, Department of Economic Affairs and Takeo Konishi, Country Director of ADB’s India Resident Mission.

While Sub-programme 1 approved in 2021 with a financing of USD 350 million established national-level policies and guidelines to improve urban services, Sub-programme 2 supports investment planning and reform actions at the state and urban local body (ULB) levels, the finance ministry said in a statement.

After signing the loan agreement, Mukherjee stated that the programme supports the government's urban sector strategy with a focus on reforms aimed at making cities livable and centres of economic growth through the provisioning of inclusive, resilient and sustainable infrastructure.

Sub-programme 2 supports the reforms initiated by states and ULBs in operationalising the national flagship programme of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 targeted for universal access to water supply and sanitation, said Konishi.

The sub-programme also supports other mission objectives for ensuring urban water security through reducing water losses, recycling treated sewage for non-domestic use, rejuvenation of water bodies, and maintaining sustainable groundwater levels, the statement said.

The programme also envisages integrated urban planning reforms to control urban sprawls and foster systemic and planned urbanisation through enhancing the entire ecosystem of legal, regulatory, and institutional reforms, along with capacity building of ULBs and community awareness, it said.

Specifically, ULBs will promote the modernisation of building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning through transit-oriented development to help cities become well-planned centres of economic growth, the ministry added.

Such integrated planning processes will incorporate climate and disaster resilience, promote nature-based solutions, improve the urban environment, and improve cities' financial sustainability through the generation of additional revenues, it noted.

Moreover, cities will be incentivised to become creditworthy through various reforms on enhancing their revenues like property taxes and user charges, improving their efficiencies and rationalising their expenditures.

This will substantially help cities to mobilise innovative financing, such as commercial borrowings, issuance of municipal bonds, sub-sovereign debts, and public–private partnerships to bridge significant deficits in urban infrastructure investments, it added.

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