Govt to borrow Rs 400 crore for AMRUT scheme

Shortage of funds has forced the state government to borrow over Rs 400 crore to take up critical infrastructure work in smaller cities and towns under the Centre-assisted Atal Mission for Rejuvenation and Urban Transformation (AMRUT) scheme.

The AMRUT scheme, which succeeded the Jawaharlal Nehru National Urban Renewal Mission (JnNURM), is being implemented across 27 cities and towns in Karnataka, including Bengaluru, at a cost of Rs 4,952 87 crore. While the Centre will give 50%, the state government will bear 20% and urban local bodies (ULBs) have to spend 30%.

As many as 16 ULBs are unable to mobilise finances required to fund AMRUT projects under their 30% share for the 2019-20 and 2020-21 financial years. For these two years, these ULBs need Rs 2,207.14 crore and their share works out to Rs 662.15 crore, of which Rs 414.98 crore will be raised through loans.

Through KUIDFC

“It has been decided to borrow loans on behalf of the ULBs through the Karnataka Urban Infrastructure Development and Finance Corporation,” Urban Development secretary (Municipalities and Urban Development Authorities) Anjum Parwez said. “No bank will lend to ULBs directly as their credit ratings are low. Hence, the government will be the guarantor.”

A majority of the loans, Parwez said, will be used for projects to provide water supply and underground drainage.

The 16 ULBs that will borrow loans are Kolar, Mandya, Hassan, Udupi, Chikkamagaluru, Raichur, Bidar, Hosapete, Badami, Gangavathi, Ranebennur, Chitradurga, Robertsonpet, Bhadravathi, Gadag-Betageri and Raichur.

“All these years, there was no requirement for us to borrow loans as the cost was shared. But now, since these Tier-2 and Tier-3 cities are unable to fund the works, we thought it was time to borrow,” Parwez said.

The government has “unconditionally and irrevocably” undertaken that it will make a budgetary allocation annually to service the loans by repaying the principal and interest. The repayment period, according to a government order, will be eight years. “The ULBs will repay the loans on their own,” Parwez said.