New Delhi, February 14 (IANS). The Union Cabinet chaired by Prime Minister Narendra Modi has approved the Urban Challenge Fund (UCF). Under this, a total central assistance (CA) of Rs 1 lakh crore will be given for building high quality infrastructure in cities.
The Cabinet informed that the Urban Challenge Fund will leverage market finance, private participation and citizen-centric reforms to create high-quality urban infrastructure. The fund aims to build resilient, productive, inclusive and climate-resilient cities so that cities can become key drivers of the country’s next phase of economic growth.
Under this, 25 percent of the cost of the urban infrastructure project will be given as central assistance, provided a minimum of 50 percent of the project cost is raised from the market.
This will lead to a total investment of Rs 4 lakh crore in the urban sector over the next five years, signaling a significant shift in India’s urban development approach away from grant-based financing towards market-linked, reform-oriented and outcome-oriented infrastructure creation.
The Cabinet said the fund will be operational from FY 2025-26 to FY 2030-31, with the implementation period extending to FY 2033-34. This realizes the vision of the government announced in Budget 2025-26 under which cities are to be growth centres, creative redevelopment of cities and proposals related to water and sanitation are to be implemented.
Projects under the Fund will be selected through a challenge-based framework including transformative impact, sustainability and reform orientation. Allocation of funds will be linked to reforms, targets and clearly defined outcomes. Continuity of reforms will be a pre-condition for release of further funds. Paperless monitoring of projects and reforms will be facilitated through a single digital portal of the Ministry of Housing and Urban Affairs.
–IANS
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