Abstract
With rapid urbanization and the closure of the Smart Cities Mission, the need for alternative and sustainable funding sources, particularly municipal borrowing, has become increasingly urgent. Cities, especially those identified as Smart Cities, must now take full responsibility for completing ongoing projects, their operations and maintenance (O&M), and long-term infrastructure sustainability. This study evaluates the financial strength of eight Indian Smart Cities that have already issued municipal bonds, focusing on their capacity to service existing debt and their readiness to raise additional funds under the proposed Urban Challenge Fund. Based on income and expenditure data for the four years ending in 2023–24, sourced from the City Finance Portal, the analysis employs a combination of accounting and statistical tools. These include trend analysis of Operating Surplus (OS), EBIDA, and the Interest Coverage Ratio (ICR), along with statistical tests such as correlation, regression, Shapiro-Wilk for normality, Durbin-Watson for autocorrelation, and VIF for multicollinearity. Non-parametric tests were used where normality was not observed. The four-year average of key indicators formed the basis for evaluating debt-servicing capacity. Findings show that Ahmedabad and Pune are financially strong, while Indore and Surat show mixed results. In contrast, Bhopal, Vadodara, Lucknow, and Pimpri Chinchwad reflect weak financial health. The results highlight that even bond-issuing cities face challenges, signaling the need for cities yet to enter the bond market to strengthen their financial preparedness, offering a compelling direction for future research. The study offers key insights into municipal financial sustainability, accountability, and strategic funding readiness.
KEYWORDS
Financial Strength, Indian Smart Cities, Muni-Bonds, Urban Challenge Fund.
Prof. Amit Singh1, Prof. Lovleen Gupta2, Pankaj Goel3*
1Professor, Department of Commerce, Delhi School of Economics, University of Delhi, New Delhi-110021, India
2Professor, Department of Commerce, Hindu College, University of Delhi, New Delhi-110021, India
3Ph.D Scholar, Department of Commerce, Delhi School of Economics, University of Delhi, New Delhi-110021, India