From Governments To Markets: Funding Urban Infrastructure

Provision of quality urban infrastructure is an area of major concern forthe Indian Economy. The environment defined by the context of globalisation and privatisation has implied fiscal compression and the consequent scarcity of resources at all levels of Government. Financing of urban infrastructure thus assumes critical importance. Public-private participation is the order of he day. It is in this context that this paper argues for a role for newer financial instruments like ‘municipal-bonds’. The paper also argues that for these initiatives to be successful, a thick and efficient secondary market in this segment of debt market is crucial. It will impart liquidity and create an incentive for the individual agents to invest in the muni-bonds. * Abhay Pethe, is Professor of Urban Economics and Regional Development, Vibhooti Shukla Chair, Department of Economics, University of Mumbai and Ms. Manju Ghodke is a Faculty member at UTIICM.