This story is from July 25, 2021

Amaravati raised Rs 2,000 crore in bonds, highest in India

Amaravati, the present legislative and once greenfield capital of Andhra Pradesh, holds the record for raising Rs 2,000 crore through municipal bonds — the highest in the country. Hyderabad follows Amaravati with the issue of Rs 495 crore worth municipal bonds.
Amaravati raised Rs 2,000 crore in bonds, highest in India
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HYDERABAD: Amaravati, the present legislative and once greenfield capital of Andhra Pradesh, holds the record for raising Rs 2,000 crore through municipal bonds — the highest in the country. Hyderabad follows Amaravati with the issue of Rs 495 crore worth municipal bonds.
Visakhapatnam, the port city which AP CM Jagan Mohan Reddy has turned into an executive capital and wanted to shift from Amaravati, could pool Rs 80 crore worth funds from the bonds.
The Union government revealed this to a member’s query in the Lok Sabha. The government said Rs 3,840 crore had been raised through municipal bonds by 10 cities.
Other cities which raised the bonds include Ahmedabad, Surat, Pune and Lucknow at Rs 200 crore each, Bhopal Rs 175 crore and Ghaziabad Rs 150 crore. The then TDP government proposed Amaravati as the ‘only capital’ to be developed at a cost of Rs 1 lakh crore over 20 years under public-private partnership mode.
With funds drying up, then government issued ‘Amaravati bonds’ in August 2018. The Capital Region Development Authority (CRDA), which has since been scrapped, managed to get investors like Franklin Templeton Asset Management (India) Private Ltd and Aditya Birla Sun Life Assessment Management Company Ltd for the bond scheme.
The CRDA is believed to have spent Rs 900 crore on infrastructure in Amaravati from the bonds raised. C Kutumba Rao, former AP Planning Board vice-chairman and who worked closely with the CRDA for raising the bonds, said: “We approached the right players and succeeded in raising the bonds. Amaravati even got Rs 36 crore as an incentive from the Centre then.”
These bonds had a 10-year tenure with a five-year moratorium on the principal amount. After it elicited a good response in the market, the CRDA had even planned to go for ‘masala’ and ‘green’ bonds on the global platforms, but the plan did not materialise.

As part of an urban infrastructure development initiative, the Centre encourages the urban local bodies to raise municipal bonds, while cities get between Rs 13 crore and Rs 26 crore as an incentive for pooling funds under the municipal bonds.
However, experts said funds raised through these bonds are often diverted though they are to be spent only on infrastructure development. “Despite clear guidelines, some governments quietly divert the funds for other purposes, including payment of salaries for their government employees. The real purpose of raising the bonds will be served only when the needs of a city are taken care of,” A Nakula Reddy, director of Andhra Mahila Sabha College and former economics professor, Osmania University, said.
He recalled that Amaravati bonds offered the highest premium (interest) rate for the buyers.
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