(Bloomberg) -- An Indian city in Prime Minister Narendra Modi’s home state of Gujarat is mulling its first green muni bond, with proceeds from the sale to be used for funding a range of projects aimed at reducing carbon emissions.
Rajkot Municipal Corp. aims to raise up to $200 million, said Chetan Nandani, deputy commissioner and chief executive officer of Smart City Rajkot, which is working with organizations including the United States Agency for International Development, or USAID, on the projects.
India’s local civic authorities are exploring municipal bonds to meet their funding needs, as the demand to upgrade infrastructure and improve connectivity grows. Still, the size of the market remains minuscule at just 26.84 billion rupees ($320 million) due to challenges around transparency and governance of civic bodies.
Rajkot Municipal raised 1 billion rupees this week in the first muni issue by a local authority in seven months. The civic body is trying to improve its rating from AA to AA+, and has consulted rating agencies, said Nandani. It also aims to boost cash flows by improving its tax collection efficiency.
READ: India Infrastructure Lender Mulls Support for Muni Bonds: Sebi
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