More than 50 per cent of the cities (or urban local bodies), covered under Jawaharlal Nehru National Urban Renewal Mission (JNNURM), have been given “investment grade rating” in the area of urban infrastructure by top rating agencies like Crisil, ICRA and FITCH.
But with not many cities showing signs of improvement and more than 20 ULBs failing to get “investment grade rating,” it may hamper the chances of the cities to garner funds for the much needed urban infrastructure.
As per a recent review of the progress of credit rating exercise, 39 out of 62 ULBs were awarded with investment grade rating.
Out of these, seven each had been given the ratings of BBB- and BBB+ (which are the lowest two segments for investment grade ratings). Nine ULBs had been awarded with AA- (next to the best) ratings, while only three were given AA rating, the best as per classification.
Among the states, the maximum number of ULBs, which had been given investment grade ratings, were in Maharashtra (12), followed by Gujarat (4) and then Andhra Pradesh and Tamil Nadu (three each).
The surveillance ratings for 16 ULBs, which is second part of the rating exercise to see if the ULBs have improved and is still going on, revealed improvement only on the part of Vijaywada.
Its rating improved from BBB+ to A-.
More over, there were at least 10 states, including Assam, Bihar, Himachal Pradesh, Jammu and Kashmir, Jharkhand, Odisha and Uttar Pradesh, which did not have any city with investment grade rating.
Urban development ministry sources said that the second part of funding for JNNURM may not be as huge as it was at the time of launch in 2005 due to various reasons. Therefore, the cities may have to depend heavily on leveraging funds from financial institutions (FIs), both national and international. “If the private sector or the FIs do not see any returns from investment, they would shy away from these cities,” said a senior ministry official.