The Uttar Pradesh government has significantly expanded its municipal bond programme to strengthen urban infrastructure financing and local body development. According to reports from Business Standard, while Lucknow, Ghaziabad, Agra, Prayagraj, and Varanasi have already raised a collective corpus of ₹500 crore through municipal bonds, the state will follow a similar route for Gorakhpur and Moradabad to raise a total of ₹130 crore. The Yogi Adityanath cabinet has recently cleared proposals to raise ₹80 crore by the Gorakhpur Municipal Corporation and ₹50 crore by the Moradabad Municipal Corporation respectively. Uttar Pradesh is among the top states with the highest number of urban local bodies floating municipal bonds for local development, positioning itself as a leader in municipal finance innovation.
Uttar Pradesh has demonstrated exceptional success in municipal bond issuances, positioning itself among the top states with the highest number of urban local bodies floating municipal bonds for local development. As reported by Business Standard, in November 2020, bonds worth ₹200 crore of the Lucknow Municipal Corporation (LMC) were oversubscribed 250 per cent on debut at the BSE. The municipal bonds issued by the LMC with a 10-year tenure offered an interest rate of 8.5 per cent. In March 2021, Ghaziabad Municipal Corporation (GBC) became India's first municipality to issue green municipal bonds worth ₹150 crore, mopping up ₹100 crore and ₹50 crore in base issue and green shoe option respectively. Later, Agra, Prayagraj, and Varanasi municipal corporations each raised ₹50 crore from investors to fund their respective infrastructure projects, demonstrating consistent investor confidence in UP's municipal bond programmes.
According to Business Standard, the municipal bond programme has enabled various municipal corporations to raise substantial funds for infrastructure projects. Agra, Prayagraj, and Varanasi municipal corporations each raised ₹50 crore from investors to fund their respective infrastructure projects. UP Finance Minister Suresh Kumar Khanna stated that the decision to allow Gorakhpur and Moradabad to float municipal bonds was taken to mobilise funds from various financial sources for the development of urban infrastructure. The minister emphasized that this will strengthen financial management, promote market orientation, and enhance the creditworthiness of urban local bodies, establishing a sustainable framework for long-term urban development financing across the state.
