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The Brihanmumbai Municipal Corporation (BMC) is preparing to raise up to INR 10,000 crore through municipal bonds, aiming to fund water infrastructure and the northern extension of the Mumbai Coastal Road. Officials confirmed the civic body is in the accreditation and credit rating process, expected to take one to two months. Plans include issuing "blue bonds" for water projects and toll-backed bonds for coastal roads. This marks a shift from BMC's traditional self-funding approach, driven by rising liabilities and the Union Budget incentive of INR 100 crore for large bond issuances.
The BMC is moving towards tapping capital markets for financing critical water and transport infrastructure, a significant shift from its traditional reliance on internal surpluses and bank deposits. Officials stated the civic body is currently undergoing accreditation and credit rating procedures, which are mandatory before any bond issuance, and the process is expected to take one to two months. Once completed, the BMC could issue bonds with fixed interest rates. Advertisement
Among the key instruments being considered are "blue bonds," earmarked specifically for water-related projects. These would fund initiatives such as sewage treatment plants (STPs), water supply augmentation, wastewater conveyance tunnels, and other treatment facilities. Officials indicated that the BMC may explore raising the full target of INR 10,000 crore through this approach.
For transport infrastructure, the civic body is looking at toll-backed bonds to support the northern extension of the Mumbai Coastal Road. Revenue from future toll collections would be used to service these bonds. It is expected that the BMC may include these plans in its upcoming 2026-27 budget.
The move has been encouraged by the Union Budget, which introduced a INR 100 crore incentive for municipal bond issuances exceeding INR 1,000 crore. Officials noted that discussions on this strategy have been ongoing for about six months, driven by the need to finance multiple large-ticket projects.
Traditionally, the BMC, India's richest civic body, with an annual budget of roughly INR 75,000 crore, has funded major projects using property tax, water charges, development fees, premiums, and fixed deposits. Past projects, including the Mumbai Coastal Road constructed at a cost of INR 1,40,000 crore, the Goregaon-Mulund Link Road (approximately INR 15,942 crore), and STPs (INR 30,000 crore), were funded without accessing the capital market.
Officials recalled that as far back as January 2021, the BMC considered issuing 'Municipal Infrastructure Bonds' to raise INR 3,000 INR 4,000 crore for large projects, but the initiative did not materialize at the time. Rising liabilities and growing capital needs now make tapping the municipal bond market a practical alternative.
This step is expected to position Mumbai alongside other major urban local bodies in India that leverage capital markets to fund infrastructure, introducing market discipline and new fiscal obligations while expanding the city's capacity to undertake large-scale projects efficiently.
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