Perennially, the ULBs has been dependent on the State government for financial support. Infomerics believes that because of weak fiscal position of the State governments generally, budgetary allocations to municipal bodies cannot be expected to increase substantially and may even decrease, with fiscal deficit becoming a critical area of economic management. Concessional funding from financial institutions may also be ruled out. Access to multilateral and bilateral funding is also going to be difficult, as there is increasing pressure from the donor countries to bring greater accountability and market orientation in the projects financed by them. Accordingly, Infomerics feels that it becomes very imperative for the ULBs to explore alternative sources of funds to meet their funding requirements. ULBs in India generally issue General Obligation Bonds and Revenue Obligation Bonds. In this backdrop, an independent assessment of the creditworthiness of the ULBs has become vital from point of view of the lenders.
In rating of debt instrument/facility of Urban Local Bodies, many factors are considered and looked into encompassing various qualitative and quantitative parameters. A brief synopsis of the rating parameters is furnished below:
MANAGEMENT & ADMINISTRATION
OPERATIONS
FINANCIALS
DEBT MANAGEMENT
STATE FINANCES
ECONOMY & DEMOGRAPHY
PROJECT VIABILITY
LEGAL ISSUES