Budget 2025: Government to establish ₹1L crore Urban Challenge Fund
What's the story
During her Union Budget presentation for 2025-26, Finance Minister Nirmala Sitharaman announced the creation of an Urban Challenge Fund worth ₹1 lakh crore.
The fund's main purpose is to back proposals to turn cities into growth hubs, support creative redevelopment, and enhance water and sanitation infrastructure.
An initial ₹10,000 crore allocation has been proposed for the 2025-26 fiscal year, to jump-start this ambitious initiative.
Project financing
Urban Challenge Fund: A financial aid for city development projects
"This fund will finance up to 25% of the cost of bankable projects with a stipulation that at least 50% of the cost is funded from bonds, bank loans, and PPPs, and allocation of ₹10,000 crore is proposed in 2025 to 26," said Sitharaman.
This funding strategy is aimed at ensuring a balanced financial approach for urban development initiatives.
Infrastructure improvement
Fund to boost water and sanitation infrastructure
Along with backing the creative redevelopment of cities, the Urban Challenge Fund will also be utilized to improve water and sanitation infrastructure.
The dual-purpose utilization of the fund highlights the government's dedication to improving urban living conditions and economic growth potential.
The initiative is part of a larger strategy unveiled in the July 2024 budget, aimed at holistic urban development.