With the fast pace of urbanization and rural to urban migration, more than 37.7 crore Indians now live in 7935 towns. The urban population growth at 29.8% from 2001 outpaced the national average growth (17.1%).
The High Powered Expert Committee setup by the Government of India (2011) estimated that the urban infrastructure require an investment of at least Rs. 39.2 lakh Crore over a 20 year period.
Total ULB revenues in 2012-13 were Rs.96,640 crore out of which, own source income was only 51.6% (Rs. 49,913 crore) while the remaining (Rs. 46,727 crore) was from other sources including market borrowings.
Since 1977, municipal bonds of only about Rs. 1353 crore have been issued as taxable/tax-free bonds or pooled financing.
Only ULBs with an investment grade rating (rated BBB- or higher) are allowed to do a public issuance, with no default in last 365 days and positive net worth are some conditions for a municipal bond issuance.