ADB approves $400 million loan to support India’s urban reforms

The Asian Development Bank (ADB) has approved a $400 million policy-based loan to India, aimed at supporting the government’s urban reform agenda for improving the quality of urban life through the creation of high-quality urban infrastructure, assured public services, and efficient governance systems, the multilateral development bank said on Tuesday. 

The ADB loan to India is under Subprogram 2 of the Sustainable Urban Development and Service Delivery Program, supporting investment planning and reform actions at the state and urban local body (ULB) levels. ADB’s Subprogram 1 approved in 2021 was aimed at establishing national-level policies and guidelines to improve urban services. 

“India has recognized the potential for cities to be centers of economic growth and has emphasized the need to make cities livable through inclusive, resilient, and sustainable infrastructure, which is also in line with ADB Strategy 2030,” said Sanjay Joshi, ADB’s principal urban development specialist. 

“The national flagship program of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 is targeted for universal access of water supply and sanitation and to ensure urban water security through reducing water losses, recycling treated sewage for non-domestic use, rejuvenation of water bodies, and maintaining sustainable groundwater levels,” Joshi added. 

AMRUT 2.0 scheme, launched on 1 October 2021 for a period of five years, is designed to provide universal coverage of water supply through functional taps to all households in all the statutory towns in the country and coverage of sewerage/septage management in 500 cities covered in the first phase of the AMRUT scheme. The total indicative outlay for AMRUT 2.0 is ₹2,99,000 crore ($35.92 billion) including the central share of ₹76,760 crore ($9.22 billion) for five years. 

The bank will continue to provide knowledge and advisory support to India’s ministry of housing and urban affairs in program implementation, including monitoring and evaluation. It will focus on lower-income states, which require support in capacity building, institutional strengthening, and policy reforms. 

The ADB program also envisages integrated urban planning reforms to control urban sprawls and foster systemic and planned urbanization through enhancing the entire ecosystem of legal, regulatory, and institutional reforms along with capacity building of ULBs and community awareness. ULBs will promote the modernization of building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning through transit-oriented development to help cities become well-planned centers of economic growth. 

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

“Moreover, cities will be incentivized to become creditworthy through various reforms on enhancing their revenues such as property taxes and user charges, improve their efficiencies and rationalize their expenditures. This will substantially help cities mobilize innovative financing such as commercial borrowings, issuance of municipal bonds, subsovereign debts, and public–private partnerships to bridge significant deficit in urban infrastructure investments,” it said.