Union Cabinet Approves New Urban Challenge Fund to Leverage Private Investment for Infrastructure
The Union Cabinet has launched the Urban Challenge Fund (UCF), a new Centrally Sponsored Scheme under the Ministry of Housing and Urban Affairs. With a central assistance of ₹1 lakh crore, it aims to leverage private participation for a total investment of ₹4 lakh crore over the next five years (2025-26 to 2030-31). The fund targets cities with a population of 10 lakh or more, state capitals, and smaller urban local bodies in specific regions. It employs a 'challenge mode' to support transformative projects, requiring cities to raise at least 50% of costs from the market through bonds or loans.
Key Points
- The scheme shifts urban development from grant-based to market-linked, reform-driven infrastructure creation.
- Central assistance covers 25% of the project cost, provided the city raises 50% from the market.
- A dedicated ₹5,000 crore corpus will enhance the creditworthiness of 4,223 cities to facilitate market finance access.
- The Credit Repayment Guarantee Scheme will provide guarantees up to ₹7 crore or 70% of the loan for first-time loans.
Exam Facts
- Central assistance: ₹1 lakh crore; Total expected investment: ₹4 lakh crore.
- Operational period: 2025-26 to 2030-31 (extendable to 2033-34).
- Nodal Ministry: Ministry of Housing and Urban Affairs (MoHUA).
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