The Government of India today signed a $400 million policy-based loan with Asian Development Bank (ADB) to support its urban reform agenda for creating high quality urban infrastructure, improving service delivery, and promoting efficient governance systems.

The signatories to the loan agreement for the Sub-programme 2 of the Sustainable Urban Development and Service Delivery Programme were Ms. Juhi Mukherjee, Joint Secretary, Department of Economic Affairs, Ministry of Finance, signing for the Government of India, and Takeo Konishi, Country Director of ADB’s India Resident Mission, signing for the ADB.

While Sub-programme 1 approved in 2021 with a financing of $350 million established national-level policies and guidelines to improve urban services, Sub-programme 2 is supporting investment planning and reform actions at the state and urban local body (ULB) levels.

After signing the loan agreement, Ms. Mukherjee stated that the programme supports the Government of India’s urban sector strategy with a focus on urban reforms aimed at making cities livable and centres of economic growth through provisioning of inclusive, resilient and sustainable infrastructure.

“Sub-programme 2 supports the reforms initiated by the states and the ULBs in operationalising the national flagship programme of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 targeted for universal access of water supply and sanitation,” said Mr. Konishi. “The sub-programme also supports other mission objectives for ensuring urban water security through reducing water losses, recycling treated sewage for non-domestic use, rejuvenation of water bodies, and maintaining sustainable ground water level.”

The programme also envisages integrated urban planning reforms to control urban sprawls and foster systemic and planned urbanisation through enhancing the entire ecosystem of legal, regulatory, and institutional reforms along with capacity building of ULBs and community awareness. Specifically, ULBs will promote modernisation of building bylaws, land pooling, urban agglomeration, and comprehensive urban mobility planning through transit-oriented development to help cities become well-planned centres of economic growth. Such integrated planning processes will incorporate climate and disaster resilience, promote nature-based solutions, improve urban environment, and improve cities’ financial sustainability through generation of additional revenues.

Moreover, cities will be incentivised to become creditworthy through various reforms on enhancing their revenues such as property taxes and user charges, improve their efficiencies and rationalize their expenditures. This will substantially help cities to mobilise innovative financing such as commercial borrowings, issuance of municipal bonds, sub sovereign debts, and public–private partnerships to bridge significant deficits in urban infrastructure investments.

Urban reform financing: support for state and local reforms to improve infrastructure, service delivery and fiscal sustainability. The programme supports state and urban local body reform actions to operationalise the national urban flagship programme, prioritising universal water and sanitation access, water-loss reduction, treated sewage reuse, water-body rejuvenation, and sustainable groundwater management. It advances integrated urban planning by modernising legal, regulatory, and institutional frameworks, enhancing ULB capacity, and promoting measures-such as updated building bylaws, land pooling, urban agglomeration, and transit-oriented mobility planning-that incorporate climate and disaster resilience. The programme also incentivises improved municipal revenue performance and creditworthiness to mobilise commercial borrowings, municipal bonds, sub-sovereign debt, and public-private partnerships for infrastructure investment.