Karnataka budget banks on loans, bonds for Bengaluru infra push

Bengaluru: The Budget includes several infrastructure projects announced for Bengaluru. 

But, a key takeaway of the budget is the increasing reliance on external funding and loans, including 'municipal bonds' to execute major projects.

Documents show that the budget has allocated Rs 3,000 crore to the Greater Bengaluru Authority (GBA). The amount, which is provided every year, will primarily be used to clear pending bills of ongoing civic works.

A majority of large projects will depend on external sources of funding. It also means the repayment burden will directly fall on citizens through user charges or toll fees.

The two large traffic decongestion projects such as tunnel roads costing Rs 40,000 crore and the 73-km Bengaluru Business Corridor (BBC) – which were mentioned in the budget – will mostly be funded using external resources, including loans.

The government has allocated Rs 500 crore for preliminary works pertaining to the BBC project continuing the support provided in the previous financial year. 

What’s more, the government for the first time has authorised five city corporations of Bengaluru to mobilise resources by issuing municipal bonds based on their balance sheets.

This move signals the possibility of revenue constraints in the newly-carved corporations and the government’s inability to directly fund projects.

On the water front, the government has announced the Cauvery phase VI project, which is estimated to cost Rs 6,939 crore. The project, aimed at meeting the drinking water needs of around 1.4 crore residents, will be taken up with financial assistance from Japan International Cooperation Agency (JICA).

Siddaramaiah also spoke about the development and upgradation works of stormwater drains, costing Rs 2,000 crore.

The project is taken up under the World Bank-assisted water security and disaster resilience programme. The Budget has proposed a nine-km pedestrian walkway along the Metro viaduct on the Outer Ring Road, estimated to cost Rs 160 crore.

The CM said the project will be sponsored by the Outer Ring Road Companies Association.

One project that does not depend on external borrowing is a tunnel road and elevated corridor between Hebbal Junction and Mekhri Circle. 

The project, costing Rs 2,250 crore, will be fully funded by Bangalore Development Authority. Overall, the Budget has allocated Rs 6,964 crore for Bengaluru projects, slightly lower than Rs 7,294 crore allocated the previous year.

Apart from the Rs 3,000 crore grant for GBA, the Budget also set aside Rs 654 crore for debt repayment by BWSSB, Rs 2,110 crore for Bangalore Metro Rail Corporation Limited, among others.