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.
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
Urban Challenge Fund FAQs
Q1: What is the primary objective of the Urban Challenge Fund (UCF)?
Ans: To support transformative and bankable urban projects
Q2: Which cities are eligible for the Urban Challenge Fund?
Ans: Cities with a population above 10 lakh, state capitals, and major industrial cities