Urban Challenge Fund provides Rs 90,000 crore to support urban projects

NEW DELHI: Around Rs 90,000 crore of the Rs 100-crore Urban Challenge Fund (UCF) will be used to partially finance 60 projects that cities can undertake, including infrastructure development, revitalization of old cities (5-20 sq km) and development of old markets.Cities can also implement projects to prevent urban flooding, replace legacy infrastructure, waste recycling and multi-storey car parks.Launching the fund aimed at implementing transformation projects, Housing and Urban Development Minister Manohar Lal said the Center will start disbursing the fund to cities in the next six months. He also launched the Rs 5,000-crore Credit Repayment Guarantee Sub-Scheme (CRGSS), which will provide term loan assistance guarantee to urban local bodies for projects undertaken under UCF.An additional Rs 5,000 crore has been set aside for project preparation and capacity building.As per the guidelines, the fund will implement a total investment of Rs 400 crore from the financial year 2025-26 to 2030-31, which can be extended by three years. While the Center and the state can each fund 25% of the project cost, the remaining 50% must be financed through bonds, loans or private participation.The guidelines also mention that private participation can also include community-led mobilization of private investment. District-level foundations, Resident Welfare Associations (RWAs) and community organizations are allowed to mobilize private investment for local urban utilities.Officials said the financing model aims to ensure financial discipline, enhance accountability and encourage private sector participation in urban infrastructure projects. Urban Affairs Minister Srinivas Katikithala said UCF has introduced a market-linked, reform-driven and results-oriented framework for urban infrastructure development.The guidelines also provide that municipal agencies may designate private entities as “Special Purpose Urban Infrastructure Managers (SPUIMs)” to provide integrated provision of housing, municipal infrastructure, and operations and maintenance in large-scale developments.