Indian Economy News

Union Minister Mr. Manohar Lal Launches Operational Guidelines for Urban Challenge Fund

The Ministry of Housing and Urban Affairs (MoHUA) has launched the operational guidelines for the Urban Challenge Fund (UCF) along with the Credit Repayment Guarantee Credit Sub-Scheme (CRGSS), marking a major step towards market-linked urban infrastructure financing. The Fund, with total central assistance of Rs. 1 lakh crore (US$ 10.71 billion), is designed to catalyse nearly Rs. 4 lakh crore (US$ 42.84 billion) in total urban investments through municipal bonds, bank loans and public-private partnerships. The scheme will focus on Tier-II and Tier-III cities, including hilly and North-Eastern regions, while supporting transformative projects across redevelopment of old city areas, urban mobility, last-mile connectivity, non-motorised transport, water and sanitation, and climate-resilient urban infrastructure.

The initiative is strategically significant for India’s urban growth agenda as it shifts city development towards a reform-driven, bankable and financially sustainable model. Of the total outlay, Rs. 90,000 crore (US$ 96.43 billion) has been earmarked for projects, while Rs. 5,000 crore (US$ 0.54 billion) each will support project preparation, capacity building and the credit guarantee mechanism. By enabling smaller cities to access market-based financing and strengthening the role of Urban Local Bodies (ULBs), the UCF is expected to accelerate the creation of investment-ready growth hubs, aligned with the vision of Viksit Bharat @2047 and the broader urban transformation roadmap from 2025-26 to 2030-31.

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