The Urban Development Ministry plans to set up a National Urban Infrastructure Fund (NUIF) with a consortium of bilateral and multilateral agencies, including World Bank and Asian Development Bank, to make long-term debt financing available to bankrupt urban local bodies under the Jawaharlal Nehru National Urban Renewal Mission (JNNURM). It also plans to mobilise funds for infrastructure projects from the domestic and overseas capital markets.

The fund, estimated to be in the range of $150 million, is expected to play a “supplementary” role to meet the country’s infrastructure gap, whose requirement in the next 30 years is estimated at $300 billion.

With a view that the 5,000-odd city municipal corporations and councils may not be able to raise long-term loans funds from banks, or enter the bond market at sustainable interest rates, NUIF is expected to rescue local urban bodies in times of poor liquidity, according to a concept note prepared by the ministry.

While the finance ministry has given its approval, the Planning Commission is said to have raised some objections. According to sources, Planning Commission is questioning the need for private financial institutions to participate in NUIF when the government-owned Hudco (Housing and Urban Development Corp.) can perform that role.

The fund will be set up as a trust and will be managed by a board to trustees, represented by bilateral and multilateral agencies, financial institutions, as well as, finance and urban development ministries, and Planning Commission. It recommends setting up of a management committee which will also function as the secretariat of NUIF, and be accountable to the board of trustees.

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