Pimpri Chinchwad Municipal Corporation (PCMC), located at the northwestern edge of Pune, is exploring green financing options to fund vital infrastructure projects. The city is set to raise approximately Rs. 200 crore through the issuance of Green Bonds, aimed at enhancing its road network and promoting sustainable mobility. The initiative is being supported by global development sector firm Palladium, which serves as the technical consultant advising PCMC on the Green Bond process.
Green Bonds are an innovative financial instrument that enables investors to fund projects focused on sustainability, specifically those that comply with Environmental, Social, and Governance (ESG) criteria. These bonds are increasingly popular as they offer a lower cost of funds compared to traditional financing options, thus making them attractive to both investors and issuers alike. For PCMC, the Green Bonds will play a critical role in the development of key infrastructure, including the Haritsetu Project and the improvement of Telco Road, which will feature walking pathways, cycling tracks, and redesigned junctions. The Rs. 200 crore raised through these bonds will not only support the road development but also contribute to the city’s broader sustainability goals, including the creation of non-motorized transport infrastructure. According to Anoop Phanse, Associate Director at Palladium India, the issuance of Green Bonds carries a “greenium” or discount, as investors are often willing to accept a slightly lower return in exchange for supporting projects that meet sustainable development standards. This makes Green Bonds an attractive financing tool for municipalities committed to environmental stewardship.
Palladium’s guidance has been instrumental in PCMC’s broader financial strategy. Beyond Green Bonds, the consultancy also helped PCMC become the 12th urban local body in India to issue a Municipal Bond, securing a Rs. 26 crore grant from the Ministry of Housing and Urban Affairs. These funding initiatives are vital for local bodies that rely heavily on property taxes but often struggle to meet their revenue targets. As highlighted in a recent report by the Comptroller and Auditor General of India, urban local bodies are only able to realize an average of 56% of their property tax demand, with much of their revenue dependent on state and central government grants. The introduction of Green and Municipal Bonds provides a valuable additional funding stream for local bodies, enabling them to finance crucial development projects without overburdening taxpayers. This innovative approach to urban financing not only addresses infrastructure needs but also aligns with national and global goals for sustainable development. In this context, the issuance of Green Bonds by PCMC sets a strong precedent for other urban local bodies to follow, prioritizing sustainability and resilience in the face of growing urbanization.
