India Enabling Environments Assessment

Municipalities in India have traditionally received grants and loans from national and state government or government-owned lending agencies for infrastructure investment. These traditional sources of funding have not kept pace with urban population growth. 

This assessment, produced by USAID’s WASH-FIN 2 Activity, documents the key features, gaps, and opportunities to increase support for municipal bonds, leverage existing repayable finance, and improve governance and performance of resilient and inclusive WASH services. 

This report documents the comparatively strong enabling environment for sub-national finance of urban WASH infrastructure and services that has developed over decades of government leadership and development partner support. It further shows that although a small number of cities have effectively leveraged upstream project preparation to access the municipal bond market more than once, the large majority of Indian cities are far from even their first bond issuance. 

USAID/India aims to demonstrate that support for upstream municipal bond preparation to urban local bodies (ULBs) can leverage and enhance existing enablers and overcome constraints. This includes working with ULBs planning municipal bonds for the first time, those planning to issue “Green” bonds, and states planning “Pooled Finance” municipal bond issues. 

Through this activity, USAID works to support reform-minded states and cities in India, and share knowledge and lessons related to the municipal bond upstream preparation process and the benefits of responsible local currency capital market debt to sustainable WASH services.