HUDCO may use local bodies to finance 100 projects

The government-run Housing and Urban Development Corp (HUDCO) may channel project finances through 100 urban local bodies in the next one year on a model similar to the government's flagship urban programme Jawaharlal Nehru National Urban Renewal Mission (JNNURM).

Though the details of the funding pattern will differ from state to state, the state governments in most cases may pay a grant to an urban body availing of HUDCO loans in addition to guaranteeing that the urban local body repays the loan, The Economic Times reported today.

The amount of the loan would be highly variable – it could be as low as Rs1 or Rs2crore or could go up to several thousand crores of rupees.

Talking to ET, HUDCO chairman V P Baligar said the programme would empower local administrations in towns and cities.

"The finances will be extended on a first come, first served basis. Urban bodies in Madhya Pradesh and Punjab have already come forward to avail of the scheme. We expect to cover 35 towns during the current fiscal, and about 100 in one year," Baligar said.

In Madhya Pradesh, where towns such as Hoshangabad, Ujjain and Bangawan have qualified for loans for drinking water and drainage projects, the state government has made a commitment to pay 25 per cent of the project cost as grants. Of the remaining, which is a HUDCO loan, a part will be returned by the local body.

"That the urban local bodies have to return the loan will make them more efficient in collecting local taxes and installing water meters," Baligar said.

Up to December end, HUDCO sanctioned about Rs13,000 crore for various projects out of which 70 per cent falls under the category of urban infrastructure. For Hyderabad water supply projects alone, it has sanctioned about Rs3,000 crore.