Better ratings show how a municipal authority has good financial conditions to repay the funds that it raises from market or funding agencies
The New Delhi Municipal Council area, which is home to the country's top VIPs and is popularly known as Lutyens' Delhi, has been ranked number one by the Smart City project under the Union Urban Development Ministry along with Pune and Navi Mumbai, with investors ready to splurge money for development works.
"NDMC, and the Navi Mumbai and Pune Municipal Corporations have an AA+(3) rating," said a senior IAS officer posted with the Union Urban Development Ministry.
Better ratings show how a municipal authority has good financial conditions to repay the funds that it raises from market or funding agencies. The 94 cities that have so far been assigned credit ratings are spread across 14 states.
During a review meeting with Union Urban Development Minister M Venkaiah Naidu, it was revealed that 55 of these cities have gotten 'Investment Grade' ratings.
The ministry is promoting credit rating of cities as one of the five transformational reforms under which about 500 cities and towns, which account for about 65 per cent of the total urban population, were to be given credit ratings during this year.
Of the total 20 ratings ranging from AAA to D, BBB- is the 'Investment Grade' rating and cities rated below BBB- need to undertake necessary interventions to improve their ratings for obtaining a positive response to the municipal bonds to be issued.
"Credit ratings are assigned based on assets and liabilities of urban local bodies, revenue streams, resources available for capital investments, double entry accounting practice and other governance practices. Besides, the credit rating of urban local bodies and ratings for individual projects for which resources are to be mobilised through municipal bonds would have a bearing on the response to such bonds," the ministry statement said.
WHAT IS CREDIT RATING?
Credit rating is an analysis of the credit risks associated with a financial instrument or a financial entity. It is a rating given to a particular entity based on the credentials and the extent to which the financial statements of the entity are sound, in terms of borrowing and lending that has been done in the past.
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