Tamil Nadu Sustainable Urban Development Project

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The project development objective of the Tamil Nadu Sustainable Urban Development Project for India is to improve urban services delivery in participating ULBs in a financially sustainable manner and to pilot improved urban management practices in selected cities. The project is comprised of three components: (i) Results Based Grants for Urban Governance; (ii) Investments in Urban Services (comprising three sub-components); and (iii) Urban Sector Technical Assistance. The first component provides results-based grants to eligible urban local bodies (ULBs) to implement new urban-management models that strengthen governance and financial sustainability. It will also provide technical assistance and project management assistance to administer and carry out the results-based grants. It will support three ULBs (Model Cities), namely, Vellore and Erode Municipal Corporations, and Hosur Municipality, in improving urban management in four areas: (i) ULB empowerment and organizational capacity; (ii) spatial / development planning; (iii) sustainable finances; and (iv) e-governance and public disclosure. The second component provides sub loans to sub borrowers by Tamil Nadu Urban Development Fund (TNUDF) and sub grants to sub recipients by project sustainability grant fund (PSGF) to implement sub projects. These sub loans /sub-grants to participating ULBs will support improvements in a range of urban services, including water, sewerage, municipal solid waste, urban transportation, septage management, and storm water drainage, as well as support project management and supervision. The second components sub component creates a reserve fund in PSGF to provide credit enhancements for municipal bonds. Finally, the third component is aimed at strengthening Tamil Nadu’s capacity to carry out urban finance and municipal governance reforms in: (i) developing next generation municipal e-governance; (ii) institutional development and capacity building, including training, sector studies, operations and maintenance, and strengthening public financial management at ULBs; and (iii) project management.