The Ministry of Housing launched the Urban Challenge Fund with the intention of including private entities in urban infrastructure development through competitive “challenge-mode” .

Why such an initiative?

• Urban infrastructure development cannot be undertaken by public finance alone.
• Focus will be on outcome-oriented infrastructure creation moving away from earlier practice.
• The fund aims to build resilient, productive, inclusive, and climate-responsive cities.

Key Features

• The fund will be operational from FY 2025-26 to FY 2030-31.
• Projects will be selected through a transparent and competitive challenge mode, focusing on result-oriented projects.
• Private sector participation will be encouraged through structured risk-sharing frameworks and benchmarking of service delivery standards.
• The fund will cover all cities with a population of 10 lakh or more.
• Central assistance will cover 25% of project costs.
• A minimum of 50% of the project cost should be raised from the market, including municipal bonds, bank loans, and public-private partnerships.
• A dedicated ₹5,000 crore corpus will enhance the creditworthiness of 4,223 cities.

Source: The Hindu