I have often wondered, how a small microbe can make life extremely difficult for a being much larger in size. I have jaundice and find myself extremely weak to conduct even my basic routine. Thanks to a certain count of "bilurubin", I look straight out of Sanjay Leela Bhansali's new movie called "Basant"(There is no such movie, I am just so yellow these days). But the fact is true for possibly every other thing that we do, I mean the "size and microbe" stuff that I just wrote.
So, JNNURM is going at its own sweet speed. Constant monitoring, mega project submission, Many projects cleared blah blah blah. Big Deal. People constantly ask me, "where are the bloody projects? When will it take me 20 minutes to cover a 20 km distance? When will I have 24 hour clean drinking water?" My replies are pretty banal, "Patience is a virtue that is good to have in a country like India." So coming to point. These days the newspapers are filled with news on the ratings of various cities. An elaborate exercise carried out by all rating agencies (thankfully the agencies werent allowed to tear off each other's clothes & amicably distributed the work amongst the four rating agencies..Pheww..), to rate the cities under JNNURM which will eventually help them to raise money from the market by way of issuance of bonds.
It is hard to understand the rationale behind this exercise (the reason is that the rating would anyways have to be done again for the instrument, in case the Local Body does decide for a bond issue).The exercise was given to the agencies somewhere towards the end of last calender year (I am being too liberal here of the time line), and it has taken them 7 months to come out with the ratings. Initially the thought was to keep them a secret(which was unfathomable to me again), but then eventually they decided to part with the ratings. Normally any rating exercise takes anywhere between 4 to 6 weeks. Imagine the extent of delay. Counterpoint could be that each rating agency had close to 15 ULBs, which could have delayed the process. The truth lies more in the speed of percolation of information than the number of ULBs assigned to rating agencies. By now most officials in the UDD must be patting their back for having carried out this really "PROFESSIONAL" exercise, but the whole point is that how many of them are really going to borrow from the bond market (Since the launch of JNNURM, only two local bodies have issued bonds). More so, how many are adept to keep up with the information requirements for a Bond Issue. Probably a handful. Even the bigger cities are yet unaware of the modalities of carrying out a bond issue. The easier answer is, "they can appoint consultants to do the needful". No consultant will be smiling at this opportunity, given the sham of having to keep up with "transparency" and the marketing of the "municipal bond" issuance together.
The timing of releasing these ratings couldnt have been worse with the interest rates at their peaks & the outlook for them for the coming 6-7 months being fairly negative. Most Local Bodies, which have a decent rating may be tempted to borrow given their project requirements and the grant tap from government soon to run dry. However, it is not going to be an easy path to tread on. We do not have a Municipal Bond market to be excited about. In fact our debt markets is still dominated by Government securities. There is hardly any secondary market to talk about as well. Under the circumstances Bank credit is the ideal option for these Local Bodies, where terms can be negotiated over the table. Having a rating and concluding a bond issue are mutually exclusive exercises and merely rating does not tantamount to bond issue.
My concluding remarks on the subject are negative enough for me to ignore them, however, I will not restraint from exercising my "Right to Speech". We have been very slow off the blocks as regards Urban Financing. There have been far too many case studies, but none have been replicated at a speed that could possibly result in far more vibrancy. This rating exercise is just another one of those meaningless exercises that has consumed important time, energy and possibly a good sum of money as well. But on a positive note, the schemes will not die out post Congress, but are likely to be continued given the gravity of situation in Urban Development. Mere continuance might not be sufficient, unless some positive action is taken in this regard.
So, JNNURM is going at its own sweet speed. Constant monitoring, mega project submission, Many projects cleared blah blah blah. Big Deal. People constantly ask me, "where are the bloody projects? When will it take me 20 minutes to cover a 20 km distance? When will I have 24 hour clean drinking water?" My replies are pretty banal, "Patience is a virtue that is good to have in a country like India." So coming to point. These days the newspapers are filled with news on the ratings of various cities. An elaborate exercise carried out by all rating agencies (thankfully the agencies werent allowed to tear off each other's clothes & amicably distributed the work amongst the four rating agencies..Pheww..), to rate the cities under JNNURM which will eventually help them to raise money from the market by way of issuance of bonds.
It is hard to understand the rationale behind this exercise (the reason is that the rating would anyways have to be done again for the instrument, in case the Local Body does decide for a bond issue).The exercise was given to the agencies somewhere towards the end of last calender year (I am being too liberal here of the time line), and it has taken them 7 months to come out with the ratings. Initially the thought was to keep them a secret(which was unfathomable to me again), but then eventually they decided to part with the ratings. Normally any rating exercise takes anywhere between 4 to 6 weeks. Imagine the extent of delay. Counterpoint could be that each rating agency had close to 15 ULBs, which could have delayed the process. The truth lies more in the speed of percolation of information than the number of ULBs assigned to rating agencies. By now most officials in the UDD must be patting their back for having carried out this really "PROFESSIONAL" exercise, but the whole point is that how many of them are really going to borrow from the bond market (Since the launch of JNNURM, only two local bodies have issued bonds). More so, how many are adept to keep up with the information requirements for a Bond Issue. Probably a handful. Even the bigger cities are yet unaware of the modalities of carrying out a bond issue. The easier answer is, "they can appoint consultants to do the needful". No consultant will be smiling at this opportunity, given the sham of having to keep up with "transparency" and the marketing of the "municipal bond" issuance together.
The timing of releasing these ratings couldnt have been worse with the interest rates at their peaks & the outlook for them for the coming 6-7 months being fairly negative. Most Local Bodies, which have a decent rating may be tempted to borrow given their project requirements and the grant tap from government soon to run dry. However, it is not going to be an easy path to tread on. We do not have a Municipal Bond market to be excited about. In fact our debt markets is still dominated by Government securities. There is hardly any secondary market to talk about as well. Under the circumstances Bank credit is the ideal option for these Local Bodies, where terms can be negotiated over the table. Having a rating and concluding a bond issue are mutually exclusive exercises and merely rating does not tantamount to bond issue.
My concluding remarks on the subject are negative enough for me to ignore them, however, I will not restraint from exercising my "Right to Speech". We have been very slow off the blocks as regards Urban Financing. There have been far too many case studies, but none have been replicated at a speed that could possibly result in far more vibrancy. This rating exercise is just another one of those meaningless exercises that has consumed important time, energy and possibly a good sum of money as well. But on a positive note, the schemes will not die out post Congress, but are likely to be continued given the gravity of situation in Urban Development. Mere continuance might not be sufficient, unless some positive action is taken in this regard.
