Union Minister of Housing and Urban Affairs, Manohar Lal today said that special emphasis is being laid on strengthening the financial capacity of urban local bodies, under the Urban Challenge Fund (UCF) programme. Mr Lal informed this while launching the guidelines of Urban Challenge Fund, in New Delhi. Speaking at the occasion, the Minister said that the aim of the UCF initiative is to enable cities to become more self-reliant, increase their own revenue, and encourage public participation in development projects. He noted that earlier, most urban projects were carried out directly by the central government through grants, technology support, or technical assistance, while implementation was largely left to states and local bodies.
The Minister stated that the Urban Challenge Fund represents a paradigm shift in India’s approach to urban development. He emphasized that the fund is not merely about providing grants but about leveraging public funds to catalyse significantly larger investments and making cities financially robust and investment-ready. He further informed that out of the total outlay, 90 thousand crore rupees has been earmarked for projects, 5 thousand crore rupees for project preparation and capacity building, and 5 thousand crore rupees for the Credit Repayment Guarantee Sub-Scheme. He emphasised that the fund will support transformative projects across key sectors such as redevelopment of old city areas and markets, urban mobility and last-mile connectivity, non-motorised transport, water and sanitation infrastructure. The Minister urged States and Urban Local Bodies to view the UCF not just as a scheme but as an opportunity to build globally competitive, resilient and investment-ready cities.
The Minister highlighted that the Urban Challenge Fund will provide total central assistance of One lakh crore rupees over the mission period. He added that central assistance for projects will be limited to 25 per cent of the cost of bankable projects, with the stipulation that at least 50 per cent of the project cost must be funded through bonds, bank loans, and public-private partnerships.
