Rajkot, the fourth largest city in Gujarat and an important hub in the Saurashtra regionhas experienced significant population growth due to high levels of migration from surrounding areas. This influx of people has contributed to the dynamic expansion of Rajkot, especially as SMEs and light car auxiliary center. Known for its innovative approach, Rajkot enjoys a distinct cost advantage that helps it stay ahead of its competitors. In response to continuous growth, the State Government has expanded the city limits almost every five years, pushing development into neighboring areas and ensuring that Rajkot’s growth is not limited to the urban core.
One important aspect for Municipal Corporations in Gujarat and Maharashtra is the institution of maximum civil services under one umbrella. To explain further, cities outside the state may have more than one entity that provides civil services. Whereas in these two countries, municipal companies provide more than 26-30 different services. Even in Gujarat, for the same service area, there will be almost 25/26 different departments providing the same services as the municipal corporation in the jurisdiction. In summary, the municipal corporation is a very large organization that affects the development of the city both physically and financially/economically.
Service area of Rajkot Municipal Corporation it is 164 square km. Municipal companies also have a culture of innovation, and have pioneered concepts like outsourcing and privatization in the early 1990s before they became industry standards. Hence it has gone beyond providing only basic city services like water, sewage, solid waste etc.; Rajkot Municipal Corporation maintains zoo, planetorium, modern library, reading room, art sports facilities, auditorium etc. With a culture of doing things differently, it is the first greenfield smart city in Gujarat with an area of ​​730 acres. This project was created in Smart City Mission and unique among other smart city mission projects. The city is also leading climate action and became the fourth consecutive ‘One Planet One City’ award winner from India. The city has also announced a Net Zero action plan by 2070 recently.
It is also important that the financial health of the Municipal Corporation is very important to ensure growth. Rajkot Municipal Corporation has undertaken many reforms and initiatives to ensure sound fiscal discipline.
As part of this venture, Rajkot Municipal Corporation raised over Rs 100 crore Municipal bonds. The issue was oversubscribed by 4.95 times and the interest received was 7.90%. The tenor of the bond is five years. Credit Rating of Rajkot Municipal Corporation is AA by CRISIL The Offer is conducted on the Electronic Bidding Platform of the National Stock Exchange.
Rajkot Municipal Corporation started preparing for the bond issue a long time ago. The first step is financial reform like conversion to double-entry accounting as well as digitization and computerization of all transactions. The next step is to improve your credit rating. The first credit rating of the Municipal Corporation was A- which has now been upgraded to AA+ by CRISIL. There have been many other efforts over the years to improve benchmarking of service levels for services, rationalization of user fees, improvement of tax and non-tax payments and overall improvement in the governance of the Municipal Corporation leading to the current credit rating. The Municipal Corporation would further like to increase its rating to AA+ to be comparable to other progressive cities in India such as Ahmedabad, Surat, Pune, Indore, etc.
The proceeds will be used to create water and sewer infrastructure for the newly incorporated urban areas. One 23 MLD STP, one 14 MLD ESR, and about 500 km of water distribution network and sewage collection network will be financed by the proceeds received from the bond issue.
The average cost of borrowing for cities will be lower because of the Rs 13 crore interest subsidy provided by the Government of India to cities that issue Municipal Bonds. The main impact that will be in the Municipal Corporation post-bond issue is the increase in transparency and reporting of financial and non-financial data. The overall performance review mechanism in the Municipal Corporation will also see a lot of improved transparency. Municipal Corporations will also benefit from strong internal control systems that must be institutionalized as part of bond compliance.
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