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India signs pact with ADB for $400-million loan to support urban reforms

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NEW DELHI : The central government recently 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. Asian Development Bank (ADB) will extend a $400-million “policy-based loan” to the Indian government to support its urban reform agenda for creating quality urban infrastructure, improving service delivery and promoting efficient governance systems.

The agreement was signed on Friday between Ms. Juhi Mukherjee, joint secretary in the finance ministry and Takeo Konishi, the country director of ADB’s India Resident Mission. It deals with the “sub-programme 2 of the Sustainable Urban Development and Service Delivery programme”.

While the sub-programme 1, approved in 2021 with a financing of $350 million, established national-level policies and guidelines to improve urban services, the sub-programme 2 is supporting investment planning and reforms at the state and urban local body (ULB) levels, the ministry said.

The latest programme supports the Indian government’s urban sector strategy, with a focus on urban reforms that are aimed at making cities not just liveable but also centres of economic growth “through provisioning of inclusive, resilient and sustainable infrastructure ”, according to the statement.

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

This 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 ground water level, according to the statement.

“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,” the ministry said in the statement.

Specifically, ULBs will promote the modernisation of building bylaws, land pooling and urban agglomeration, and comprehensive urban mobility planning to help cities emerge as centres of economic growth.

“Such integrated planning processes will incorporate climate and disaster resilience, promote nature-based solutions, improve urban environment, and improve cities’ financial sustainability through generation of additional revenues,” the ministry said.

Cities will also be incentivised to become creditworthy by undertaking various reforms for enhancing their revenues, including property taxes and user charges. They will also be encouraged to improve their efficiencies and rationalise their expenditures, according to the statement.

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