India and Asian Development Bank (ADB) have signed a $ 350 million policy-based loan to improve access to urban services by accelerating policy actions and reforms to enhance service delivery and promote performance-based central fiscal transfers to urban local bodies.

An ADB note here stated that the agreement was signed on17 December. Additional Secretary Department of Economic Affairs Rajat Kumar Mishra signed the loan agreement for the first subprogram of $ 350 million with ADB’s Country Director at India Resident Mission Takeo Konishi, under Sustainable Urban Development and Service Delivery Program.

The first subprogram will establish essential policies and guidelines for urban reforms at the national level followed by specific reform actions and program proposals at the state and ULB (Urban Local Body) -level under the second subprogram.

After signing the loan agreement, Mishra said the program was aligned with the Indian government’s national flagship programs promoting cities as engines of economic growth by improving the quality of urban life through the creation of high-quality urban infrastructure, assured service provisions, and efficient governance.

“The program builds upon ADB’s long engagement with India in the urban sector with continued support to the central and state governments to undertake reforms to ensure universal and improved access to basic urban services such as water supply, sanitation, and affordable rental housing, especially for the poor most affected by the COVID-19 pandemic,” Takeo Konishi later said.

These outcomes will be achieved with support to India’s recently launched national flagship missions, Atal Mission for Rejuvenation and Urban Transformation (AMRUT) 2.0 that envisages accelerated universal access of piped water supply and sanitation, and the Pradhan Mantri Awas Yojana that aims to provide affordable housing to all, including poor, urban migrant and industrial workers.

The program will also promote performance-based central fiscal transfers to ULBs on the recommendations of the 15th Finance Commission by linking fiscal transfers to improved urban service delivery. This will help boost local financial resource generation in ULBs resulting in improved urban governance, the ADB note said.

ADB will also provide knowledge and advisory support to the Ministry of Housing and Urban Affairs in program implementation, including monitoring and evaluation. It will also support urban local bodies particularly in selecting low-income states to implement policy reforms, prepare investment plans, and provide recommendations on cross-cutting issues like climate change, environmental and social safeguards assessment, and gender equality and social inclusion.

With increasing urbanization, cities are expected to become a strong engine of growth for India—generating economic activity and outputs, creating jobs for a significant volume of workers, improving competitiveness and urban livability, and protecting the environment, ADB note further underlined.