Wednesday, June 14, 2017

Image-building herculean task for PMC


PUNE: The Pune Municipal Corporation has to ensure its accounts are prepared on time, their audit is carried out by an independent agency, financial and operational data is made public and it complies with all eligibility requirements put forth by Sebi and the state government to successfully raise money through bonds.

According to experts, the PMC has to comply with disclosure standards adopted by the private sector to boost investor confidence and bond subscriptions. "Going by the PMC's history, these conditions would prove a major challenge for the civic body. It is not clear what will PMC do with bonds and how it will respond to the market. Is the civic body capable of this venture?" asked senior Congress leader Arvind Shinde, who opposed the PMC's move in the recent general body meeting.

Opposition leaders claimed the civic administration’s insistence on bonds was "suspicious" as there were no efforts to look for other revenue resources. The leader of Opposition in the PMC, Chetan Tupe, insisted the civic administration's hurry to go for bonds was not understandable. "The administration is acting like bonds is the only option left before the PMC to complete the water project," he said.

The civic administration, on the other hand, stressed it was going according to the state and the central government's directives. The civic body officials stated the PMC would have to go for bonds because only a part of the capital requirement could be met through the funds from the central and state governments.

"This is a first major effort to raise money by floating bonds. The BJP-led government is fully backing the civic administration. Hence, even local BJP leaders have no say in the proposal. The administration is directly dealing with the government and so the PMC will go ahead with bonds," said a senior civic official, admitting that the PMC would have to bring tremendous changes in its financial structure and functioning once bonds came into the market.

In March 2015, the SEBI passed regulations to facilitate issuance of municipal debt and listing of debt securities by municipalities in India. This will enable investment in public infrastructure of the 100 Smart Cities, including Pune. The 14th Finance Commission has allocated Rs17,400 crore to municipalities for the period 2016-20 as performance grants are tied to conditions, which, when complied to, will help municipalities raise money from the markets.


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