3 months ago
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The Union Cabinet connected Friday (February 13, 2026) approved the motorboat of the ‘Urban Challenge Fund’ (UCF), a caller Centrally sponsored strategy of the Ministry of Housing and Urban Affairs, with a full Central assistance of ₹1 lakh crore.
It aims to enactment transformative and bankable municipality projects done competitory “challenge-mode” arsenic municipality infrastructure cannot beryllium funded by nationalist concern alone. Central assistance volition screen 25% of task costs, taxable to raising a minimum of 50% of the task outgo from the market, including municipal bonds, slope loans, and public-private partnerships starring to an expected full concern of ₹4 lakh crore successful the municipality assemblage successful the adjacent 5 years.
The UCF marks a paradigm displacement successful India’s municipality improvement attack from grant-based financing to market-linked, reform-driven and outcome-oriented infrastructure creation, a connection by the authorities said.
It volition leverage marketplace finance, backstage participation, and citizen-centric reforms for the transportation of precocious prime municipality infrastructure. The money aims to physique resilient, productive, inclusive, and climate-responsive cities, positioning them arsenic a cardinal operator of the country’s adjacent signifier of economical growth, the connection added.
The money volition beryllium operational from FY 2025-26 to FY 2030-31, with an extendable implementation play up to FY 2033-34. It gives effect to the government’s vision, announced successful the Union Budget 2025-26, to instrumentality proposals relating to ‘Cities arsenic Growth Hubs’, ‘Creative Redevelopment of Cities’, and ‘Water and Sanitation’.
Projects volition beryllium selected done a transparent and competitory situation mode, ensuring enactment to high-impact and reform-oriented proposals. There volition beryllium a beardown thrust connected reforms crossed municipality governance, marketplace and fiscal systems, operational efficiency, and municipality planning, the connection said.
Private assemblage information volition beryllium encouraged done structured risk-sharing frameworks and benchmarking of work transportation standards. A dedicated ₹5,000 crore corpus volition heighten the creditworthiness of 4,223 cities, including Tier 2 and Tier 3 cities, peculiarly for first-time entree to marketplace finance.
The money volition screen each cities with a colonisation of 10 lakh oregon much (based connected 2025 estimates); each capitals of States and Union Territories that are not included successful the above; and large concern cities with a colonisation of 1 lakh oregon more. Additionally, each municipality section bodies successful hilly States and successful northeastern States, and smaller municipality section bodies with a colonisation beneath 1 lakh volition beryllium eligible for enactment nether the Credit Repayment Guarantee Scheme. In principle, each cities volition beryllium covered nether UCF.
