New Delhi: Marking a paradigm shift in the urban development approach, the government on Saturday approved the launch of the Urban Challenge Fund (UCF) with a central assistance of Rs 1 lakh crore.
The central assistance will cover 25 percent of the project cost, subject to raising minimum 50 percent of the project cost from market.
This will lead to a total investment of Rs 4 lakh crore in urban sector in the next five years, marking a paradigm shift from grant-based financing to market-linked, reform-driven and outcome-oriented infrastructure creation, according to the Cabinet chaired by Prime Minister Narendra Modi.
The Fund will be operational from FY 2025-26 to FY 2030-31, with an extendable implementation period up to FY 2033-34.
It gives effect to the Government's vision announced in Budget 2025-26 to implement proposals relating to cities as Growth Hubs, Creative Redevelopment of Cities, and Water and Sanitation, said the Cabinet in a statement.
The Fund will leverage market finance, private participation and citizen- centric reforms for delivery of high-quality urban infrastructure.
It aims to build resilient, productive, inclusive and climate-responsive cities, positioning those as key drivers of the country's next phase of economic growth.
According to an official statement, a minimum of 50 percent of project financing have to be mobilized from market sources, including municipal bonds, bank loans and public-private partnerships (PPPs).
The remaining share may be contributed by States, Union Territories (UTs), Urban Local Bodies (ULBs) or other sources. Projects will be selected through a transparent and competitive challenge mode, ensuring support to high-impact and reform-oriented proposals.
Moreover, a dedicated Rs 5,000 crore corpus will enhance the creditworthiness of 4,223 cities including Tier 2 and 3 cities, particularly for first-time access to market finance. (IANS)
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