News- The Union Cabinet chaired by Prime Minister Narendra Modi approved the launch of the Urban Challenge Fund with total Central Assistance of Rs.1 lakh crore.
About Urban Challenge Fund
- Type of Scheme: It is a new centrally sponsored scheme.
- Ministry involved: It is implemented by the Ministry of Housing and Urban Affairs.
- Aim: It aims to build resilient, productive, inclusive, and climate-responsive cities that drive the country’s next phase of economic growth.
- Funding: The scheme provides total Central Assistance of ₹1 lakh crore, covering 25% of project cost with mandatory market-based financing.
- Duration: It will operate from FY 2025–26 to FY 2030–31, with an extendable implementation period up to FY 2033–34.
- Key Features
- Market-based financing: At least 50% project funding must come from municipal bonds, bank loans and PPPs.
- Transparent Project Selection: Projects will be chosen through a competitive challenge mode supporting high-impact and reform-oriented proposals.
- Reform-linked framework: Funding is tied to governance, financial, operational and urban planning reforms, supported by defined KPIs and third-party verification.
- Private sector participation: Structured risk-sharing frameworks and service benchmarking will encourage private investment and efficiency.
- Credit enhancement support: A dedicated Rs. 5,000 crore corpus will improve creditworthiness of 4223 cities, especially Tier-II and Tier-III cities.
- Comprehensive urban coverage: Major cities, capitals and eligible smaller ULBs, including those in hilly and North-Eastern regions, will receive support.
