Now, the Credit Rating Information Service of India (CRISIL) has put the AA rating given to the AMC under scrutiny, as it has not been able to raise Rs 150 crore from the bonds market till date.

The AMC is now contemplating raising money from tax-free bonds of Rs 150 crore by reviving its earlier proposal of last year.

With the abolition of octroi, AMC's credit risk went up in the absence of a commensurate substitute, and it is yet to be worked out by the state government.

It was expected that in the state budget of 2008-09, the Narendra Modi government would pay attention to this but so far nothing has happened in this regard.

The ad hoc mechanism of providing matching grants in lieu of octroi has continued. Not only this, the annual increment in the grant, which was expected to be 20 per cent, was kept at 10 per cent only, causing a dent of Rs 150 crore in the AMC coffers.

According to Municipal Commissioner I P Gautam, this means that the AMC will remain under CRISIL's watch.

However, Gautam tries to put up a brave front, optimistic that AMC's requirements will be fulfilled and there is no reason for the civic body to worry about liquidity.

However, the fact remains that this uncertainty and inadequate funding by way of grants is going to have a negative bearing on the rating of the civic body which was the first in Asia to come out with municipal bonds way back in 1997.

In the days to come when civic bodies will be required to enhance their capacity to access the bonds market to fund their capital projects approved by the Jawaharlal Nehru National Urban Renewal Mission (JNURM), there is going to be a greater need for a transparent mechanism for transfer of grants from the state government.

This is not happening in the current financial year if one goes by the state budget proposals.

Gautam said the civic body is trying to streamline the revenue collection from alternative sources like income from hoardings, property tax, phased increase in user charges among others, besides strengthening the system of collecting profession tax.