What is AMRUT 2.0 and how does it help cities?

AMRUT 2.0 is a program providing fiscal support and incentives to urban local bodies, lowering their borrowing costs for development projects.

Which cities issued municipal bonds in 2025?

In 2025, cities like Agra, Varanasi, Prayagraj, Bhavnagar, Chennai, and Nashik issued municipal bonds.

How do incentives affect municipal bond borrowing costs?

Incentives under AMRUT 2.0, especially for first-time issuers, directly reduce interest expenses, making borrowing more affordable.

Home / Business and Economy / AMRUT 2.0 Fuels Urban Local Body Funding

AMRUT 2.0 Fuels Urban Local Body Funding

11 Jan

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Summary

First-time municipal issuers in 2025 included Agra and Varanasi.
AMRUT 2.0 fiscal support significantly boosted bond issuances.
Incentives lower borrowing costs for urban local bodies.

AMRUT 2.0 Fuels Urban Local Body Funding

In 2025, several urban local bodies (ULBs) successfully issued municipal bonds, marking a significant trend in municipal finance. Notably, first-time issuers such as Agra Nagar Nigam, Prayagraj Nagar Nigam, Varanasi Nagar Nigam, and Bhavnagar Municipal Corporation entered the market. They were joined by established issuers including Greater Chennai Corporation and Nashik Municipal Corporation.

The primary catalyst for this increase in municipal bond activity was the fiscal support provided under the AMRUT 2.0 scheme. Unlike previous phases, AMRUT 2.0 offers quantified incentives that directly reduce the cost of borrowing for ULBs. First-time issuers can receive incentives up to Rs 13 crore per Rs 100 crore issued, substantially lowering long-term interest expenses.

Repeat issuers benefit from incentives linked to green bonds, promoting environmental, social, and governance (ESG) objectives while ensuring predictable financing. This structured support mechanism has re-established municipal bonds as a practical and attractive funding avenue for urban local bodies aiming to finance their development projects.