New era under the leadership of PM Modi: Great news for cities

New Delhi. The Union Cabinet chaired by Prime Minister Narendra Modi has recently approved the Urban Challenge Fund (UCF). This initiative has been launched to encourage the creation of high quality infrastructure in the cities of India and for this the Central Government has decided to provide a total assistance of Rs 1 lakh crore.

Purpose and importance

The main goal of the Urban Challenge Fund is to help cities become resilient, productive, inclusive and climate-resilient. This scheme will not only improve the infrastructure of cities, but will also make them the main centers of economic development. This initiative will promote sustainable and result-oriented growth in cities by leveraging private investment, market finance and citizen-centric reforms.

Financial structure and investment

Under this scheme, 25 percent of the total cost of urban infrastructure projects will be given as central assistance, provided that at least 50 percent of the project cost is raised from the market. With the implementation of this initiative, an investment of approximately Rs 4 lakh crore is expected in the cities in the coming five years. The scheme is different from traditional grant-based financing and will be operated with a market-engaged, reform-oriented and result-focused approach. Its objective is to ensure that investment is not limited to construction alone, but also ensures long-term improvement and quality in cities.

Implementation and Monitoring

The Urban Challenge Fund will be operated from FY 2025-26 to 2030-31, and may be extended to 2033-34 if required. Projects will be selected on the basis of their transformative potential, sustainability and reform-oriented nature. The Ministry of Housing and Urban Affairs will use a single digital portal to monitor the projects, thereby ensuring paperless and transparent monitoring of all projects. Additionally, the allocation of funds will be linked to clear targets, reforms and defined outcomes to promote continuous improvement and ease the release of funds for future projects.