Rs 90,000 crore from Urban Challenge Fund to back city projects

NEW DELHI: Around Rs 90,000 crore out of the Rs 1 lakh crore Urban Challenge Fund (UCF) will be utilised for partial funding for 60 types projects that cities can take up, including development of infrastructure, revitalisation of old city areas (5-20 sqkm) and development of old markets.

Cities can also implement projects for preventing urban flooding, replace legacy infrastructure, recycling waste and multi-storey parking.

Launching the fund aimed at implementation of transformational projects, housing and urban development minister Manohar Lal said Centre will start releasing the fund to cities in the next six months. He also launched a Rs 5,000 crore Credit Repayment Guarantee Sub-Scheme (CRGSS), which will provide guarantee coverage for term loan assistance to urban local bodies for their projects taken up under UCF.

Another Rs 5,000 crore has been set aside for project preparation and capacity building.

As per the guidelines, the fund will be implemented with a total investment of Rs 4 lakh crore from FY 2025-26 to FY 2030-31, extendable by three years. While the Centre and state can fund 25% of the project cost each, the remaining 50% must be financed through bonds, loans, or private participation.

The guidelines also mentioned that private participation can also include community-led private investment mobilisation. Ward-level foundations, resident welfare associations (RWAs), and community organisations are allowed to mobilise private investment for local urban utilities.

Officials said this funding pattern is aimed at ensuring financial discipline, enhancing accountability and encouraging private sector participation in urban infrastructure projects. Urban affairs secretary Srinivas Katikithala said the UCF introduces a market-linked, reform-driven and outcome-oriented framework for urban infrastructure development.

The guidelines also specify that municipal bodies can designate private entities as “Special Purpose Urban Infrastructure Manager (SPUIM)” for integrated delivery of housing, civic infrastructure, and operations and maintenance in large-scale development.

Get real-time updates and result insights on the CBSE 12 Result 2026.