New Delhi, Feb 14: The Union Cabinet has approved the launch of a ₹1 lakh crore Urban Challenge Fund (UCF) to drive market-led urban transformation, Union Minister Ashwini Vaishnaw said on Saturday.
The government said the initiative is expected to catalyse a total investment of ₹4 lakh crore in the urban sector over the next five years. Under the scheme, central assistance will cover 25 per cent of a project’s cost, subject to at least 50 per cent of funding being mobilised from the market.
Describing the move as a paradigm shift, the government said the UCF transitions India’s urban development approach from grant-based financing to a market-linked, reform-driven and outcome-oriented infrastructure model.
The fund will leverage market financing, encourage private sector participation and promote citizen-centric reforms to deliver high-quality urban infrastructure.
According to the statement, the UCF aims to build resilient, productive, inclusive and climate-responsive cities, positioning them as key engines of economic growth.
The fund will be operational from FY 2025-26 to FY 2030-31, with an extendable implementation period up to FY 2033-34.
The initiative gives effect to the vision outlined in Budget 2025-26, focusing on cities as growth hubs, creative redevelopment and improved water and sanitation infrastructure. (Agencies)
