The task of credit ratings of cities is increasing at a fast pace and the result is that out of the 500 cities involved in the smart city mission, 94 have got the credit ratings. Atal Mission for Rejuvenation and Urban Transformation (AMRUT) also covers these cities.
During the scrutiny of the task of credit ratings in India, a government release came out reporting that 55 out of these 94 cities have been granted the ‘Investment Grade’ ratings.
The 94 cities which have been given the credit ratings in India are scattered across 14 cities.
Credit rating of cities is being stimulated by the Ministry of Urban Development as a part of the Transformation Reforms. Under these Transformation Reforms, all the cities that have 65% of their population as urban, they were eligible for Credit Ratings this year.
The ratings have a range from AAA to D, where BBB is equivalent to the ‘Investment Grade’ rating. All the cities which are given a rating that is below BBB are required to take adequate steps to improve their conditions. In turn, their ratings will improve to get positive response for issuing Municipal Bonds.
To get assigned, Credits Ratings have various bases to review, which are –
• Revenue streams
• Double entry accounting practice
• Assets and liabilities of Urban Local Bodies
• Available resources for making capital investments
• Other governance practices