Hubballi-Dharwad, Davangere, Belagavi have poor credit rating

Rating of BBB or below shows their finances are weak to raise funds

The creditworthiness of three major cities in Karnataka - Hubballi-Dharwad, Davangere and Belagavi - which have also been identified for development under Smart Cities project is lower medium grade as they have got credit rating of BBB or below.

As per the credit rating of 94 cities across the country, including some urban local bodies identified for the project, released by the Union Ministry of Urban Development here, Hubballi-Dharwad and Davangere received BBB rating while Belagavi got BBB-.

However, New Delhi Municipal (NDMC), Navi Mumbai and Pune received AA+, Ahmedabad, Visakhapatnam, Greater Hyderabad Municipal Corporation got AA, while Surat, Nashik, Thane and Pimpri-Chinchwad got AA- rating, says the report.

The total 500 cities include urban local bodies (ULBs) identified under Smart Cities mission and Atal Mission of Rejuvenation and Urban Transformation. The credit rating was assigned to 94 cities, including three in Karnataka, in first stage. Over time, the ministry will assign credit rating for all 500 cities and towns, which account for about 65% of the total urban population.

The rating exercise was conducted to assess the creditworthiness of the cities so that they can float municipal bonds or raise funds from various sources for development activities. Better ratings like AA+ or AA- or A indicate how a municipal authority has good financial conditions to repay the fund that it raises from the market or funding agencies, an official in the Ministry told Deccan Herald.

Minister for Urban Development M Venkaiah Naidu, who reviewed the credit-rating exercise here on Saturday, said cities with low rating must improve and this will help them raise more funds through bonds or from lending agencies.  The Ministry of Urban Development conducted credit-rating of cities as one of the transformational reforms so that lending agencies will know creditworthiness of ULBs, the minister said.

The Centre recently said that in Davangere and Belagavi, the investment conversion ratio is less than 22%. This means the funds utilised in execution of projects or approved projects are less than Rs 1,000 crore till now, according to an analysis of the implementation of Smart Cities projects done by the Ministry.