Experiments in local governments accessing the private capital markets provide promising results.
Experience in India with municipal credit is limited primarily be-
cause of a lack of decentralization beyond the state level. Most
states, though financially weak, have significant autonomy—but
this autonomy is not passed down to municipalities. Some
states have taken steps to augment the power of lower levels of
government, however, and these few exceptions have added
positive chapters to the evolving story of local credit in India.
The formation of municipal corporations with borrowing pow-
ers and the creation of successful municipal development funds
are promising beginnings.
Although municipal governments continue to depend on rev-
enue transfers from state governments, they have been as-
signed significant expenditure responsibilities, compounded in
many cases by increasingly pressing infrastructure needs.
Meanwhile, the country’s debt market remains dominated by