BUDGET
Govt proposes INR 1 bln incentive for single municipal bond issuance
This story was originally published at 13:53 IST on 1 February 2026
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--BUDGET: Moot incentive of INR 1 bln for single municipal bond issuance
--BUDGET: To set up mkt-making framework for corporate bond market
--BUDGET: To introduce total return swaps on corp bonds
NEW DELHI – The government has proposed an incentive of INR 1 billion for single municipal bond issuances of over INR 10 billion, while smaller and medium funds of up to INR 2 billion will continue to be supported under the Atal Mission for Rejuvenation and Urban Transformation scheme, according to the Union Budget for 2026-27 (Apr-Mar) presented by Finance Minister Nirmala Sitharaman in the Lok Sabha Sunday.
The Atal Mission for Rejuvenation and Urban Transformation, or AMRUT, scheme provides support to urban local bodies for raising funds through municipal bonds, aiming to make cities self-reliant, financially sustainable, and capable of upgrading infrastructure.
"To encourage the issuance of municipal bonds of higher value by large cities, I propose an incentive of Rs. 100 crore (INR 100 billion) for a single bond issuance of more than Rs. 1000 crore (INR 10 billion)", Sitharaman said. "The current scheme under AMRUT which incentivises issuances up to Rs. 200 crore (INR 2 billion) will also continue to support smaller and medium towns."
To develop the corporate bond market, the government plans to introduce a market-making framework with suitable access to funds and derivatives on corporate bond indices, as well as total return swaps on corporate bonds. End
Reported by Vaishali Tyagi
Edited by Deepshikha Bhardwaj
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