BHUBANESWAR: For the first time, the urban local bodies in the State may be assessed for their credit worthiness. ICRA Ltd, India’s top financial information services firm, has proposed to conduct credit ratings of the municipal bodies. The move is aimed at attracting private capital into the municipal sector in Orissa which has begun to deal in huge infrastructure - both social and physical - besides facing the onerous task of maintaining them. That apart, operational efficiency improvement through benchmarking of the services is another reason for the rating to which State government agencies are not too familiar with. In states like Andhra Pradesh and Tamil Nadu, the municipal corporations have not only undergone credit ratings but their performance has prompted them to float bonds in the debt markets. Orissa could well eye a similar course if the ICRA proposal falls into place. Sources in the Housing and Urban Development Department said, ICRA will assess four different components as part of the credit rating. It will undertake a credit quality study to understand the inter-governmental financial relationship, flow of funds and channel mechanism. Similarly, economy of the municipal areas, operational efficiency, municipal finances and management quality will be other components of the assessment. Under the municipal finances, ICRA has proposed to assess vital parameters such as the own tax revenue, state share, grants, revenue expenditure pattern, liquidity and most importantly, debt performance of the ULBs. Similarly, PPP track record, e-governance, taxation and tariff as well as quality of finance will come under study. The credit rating will be conducted keeping in view four service sectors - water supply, sewerage, solid waste management and roads. The premier rating agency plans to cover, under the Phase I of the rating process, legal and administrative framework, service area characteristics, level of service provisions, collection efficiency and track record in addressing the grievances in these four sectors. Extent of services provided and their quality, implications as well as acceptance of tariff increase and future investment will also be assessed. Currently, Orissa has 103 ULBs including, three municipal corporations at Bhubaneswar, Cuttack and Berhampur besides 37 municipalities and 63 notified area councils. Barring a few, most struggle with resource management with their operational efficiency not up to mark. The urban reforms ushered in the last few years too have not helped to a great extent put the municipal bodies on course as many have not yet put in place the administrative mechanisms required for services delivery.
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