Urban Challenge Fund

Urban Challenge Fund Latest News

Recently, the Union Cabinet chaired by the Prime Minister of India approved the launch of the Urban Challenge Fund (UCF).

About Urban Challenge Fund

• It is a new centrally sponsored scheme of the Ministry of Housing and Urban Affairs.
• It aims to build resilient, productive, inclusive and climate-responsive cities, positioning those as key driver of the country’s next phase of economic growth.
• Financial Outlay: Total Central assistance of ₹1 lakh crore.
• Tenure: It will be operational from FY 2025–26 to FY 2030–31, with an extendable implementation period up to FY 2033–34.

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Features of the Urban Challenge Fund

• A minimum of 50 per cent of project financing has to be mobilised 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.
• Focus area: A strong thrust on reforms across Urban Governance, Market & Financial systems, Operational efficiency, and Urban Planning
• A dedicated ₹5,000 crore corpus will enhance the creditworthiness of 4223 cities including Tier- II and Tier-III cities, particularly for first-time access to market finance.
• The Fund will cover:
  • All cities with a population of 10 lakh or more (2025 estimates);
  • All State and Union Territory capitals not covered above; and
  • Major industrial cities with a population of 1 lakh or more
  • Additionally, all ULBs in hilly States, North-Eastern States, and smaller ULBs with population below 1 lakh will be eligible for support under the Credit Repayment Guarantee Scheme.

Source: PIB