What municipal bond market foray means for Gandhinagar's future

India Today

27-07-2025

Gujarat capital Gandhinagar has cautiously attempted a leap into the municipal bond market with a modest issue size of Rs 25 crore, but it was pleasantly surprised when oversubscribed nine times to Rs 225 crore in just one minute on the National Stock Exchange recently.The Gandhinagar Municipal Corporation (GMC) has become the 17th municipal corporation in the country to issue municipal bonds, and the fifth in Gujarat. The city got a municipal corporation 15 years ago.advertisementIndia's municipal bond market of 17 cities totals to Rs 3,359 crore, of which Gujarat's five cities make up Rs 925 crore, a little under a third of the total value. Gujarat has been among the frontrunners in availing financing through municipal bonds, with the highest number of cities opting for it.The early, yet modest, leap into the municipal bond market is explained by GMC commissioner J.N. Vaghela. 'This is an infrastructure bond issued with the explicit purpose of developing a high street road of six km between Raksha Shakti Circle and GIFT City. In the near future, we are planning for this stretch to develop as the hub of activity as part of the planned city development,' Vaghela told INDIA TODAY. The GMC received investment from retail investors, foreign institutional investors (FIIs) and several public sector undertakings.
'Bonds are a very nimble instrument to raise money. The US's city bond market is worth $3.5 trillion, while India's, with 8,000 municipal corporations, is just $500 million. Only 37 Indian cities have credit rating. I believe in the next 3-5 years, at least 500 Indian cities should work to get credit ratings,' says Keshav Verma, chairman of the high-level committee on urban planning appointed by the Union ministry of housing and urban affairs.Gandhinagar was designed as a planned city on the banks of the Sabarmati river by French architect Le Corbusier, along with Chandigarh, in the 1950s. Its planned development continues seven decades later as it is metamorphosing from a sleepy retirement haven for state government employees to a vibrant metropolis of international business and premium education institutes.Gandhinagar's population went up from 24,055 in 1971 to an estimated 250,000 in 2024, and this number is projected to increase at least four fold over the next decade. Gandhinagar's urban area has expanded from 56 sq km in the seventies to 388 sq km presently, including the region covered by the GMC and the Gandhinagar Urban Development Authority (GUDA).Since 2001, when Narendra Modi took over as chief minister of the state, the city has hosted the biannual Vibrant Gujarat Global Summit, which brought attention to the once-sleepy town with an infusion of business visitors and the beginnings of the hospitality industry. The establishment of educational institutions, such as the National Institute of Design, the Dhirubhai Ambani Institute of Information and Communication Technology and the Pandit Deendayal Energy University, further acted as boosters. GIFT City on the eastern banks of the Sabarmati put Gandhinagar on the global map.advertisementUnder the political patronage of its Lok Sabha MP and former deputy prime minister L.K. Advani till 2019, and incumbent Union home minister Amit Shah, the city is now being developed as a seamless urban agglomerate with Ahmedabad. The expanded metropolis is soon expected to have a joint urban local body for ease of administration. The much-touted Sabarmati Riverfront will extend up to GIFT City in another three years.The latest data of the National Housing Board's (NHB) Residential Index (Residex), comparing prices between 2018 and 2024, revealed that the price per sq feet of a built-up property has more than doubled, a feat not matched by any other city in the country under the NHB's study for the period. Yet the true import of being Gandhinagar is in the promise of the future as its development is undertaken with the aspiration to host the Summer Olympics in 2036 with twin city Ahmedabad.advertisementOver the past two years, GMC has undertaken rigorous external audits and achieved CARE (AA) and CRISIL (AA-/Stable) credit ratings. 'Over the past five years, there has been a steady rise in budgetary allocation from the state government to GMC, resulting in its good financial health. We are now looking to become self-sustainable,' Vaghela said.Sources said the issuance of bonds was to test market sentiment by the GMC, necessitated as it is a small and relatively young urban local body. 'The response has given confidence to administrators working on a major Green Bond issue in the near future,' the source said.Subscribe to India Today Magazine- Ends