Union Minister for Housing and Urban Affairs, Manohar Lal, unveiled the operational guidelines for the Urban Challenge Fund (UCF) and the Credit Repayment Guarantee Sub-Scheme (CRGSS) on Wednesday. The UCF, amounting to Rs 1 lakh crore, aims to attract nearly four times the investment through market-based financing. This initiative marks a significant shift in India’s urban development strategy by utilizing public funds to stimulate larger investments and enhance cities’ financial resilience.
In his address at the launch event, the minister highlighted the importance of India’s cities as drivers of economic growth, innovation, and job creation. He emphasized the need for effective urban planning, financing, and governance to realize the vision of ‘Viksit Bharat 2047′. While existing programs like AMRUT, Swachh Bharat Mission, and Smart Cities Mission have bolstered infrastructure, the focus now shifts towards ensuring cities’ financial sustainability and readiness for investments.
The UCF, supported by a total central assistance of Rs 1 lakh crore, is structured to leverage market-based financing for urban projects. The central assistance will be limited to 25% of the project cost, with a requirement for cities to raise at least 50% through municipal bonds, bank loans, and public-private partnerships (PPPs). Out of the allocated funds, Rs 90,000 crore is earmarked for projects, Rs 5,000 crore for project preparation and capacity building, and Rs 5,000 crore for the CRGSS.
The CRGSS component of the fund is expected to benefit smaller cities, including Tier-II and Tier-III cities, as well as those in hilly and North-Eastern regions, by facilitating access to market-based financing through credit guarantees. The UCF will support various projects such as urban mobility, redevelopment of old city areas, non-motorised transport, water and sanitation infrastructure, and climate-resilient urban development. The minister also stressed the crucial role of Urban Local Bodies (ULBs) in enhancing financial capabilities and engaging in market-based financing mechanisms.
