Finance Minister Nirmala Sitharaman on Saturday announced the establishment of a Rs1 lakh crore Urban Challenge Fund to drive the transformation of cities into growth hubs, support creative redevelopment, and enhance water and sanitation infrastructure, as outlined in the July Budget.
“Building on the July budget proposals, the urban sector reforms related to governance, municipal services, land, and planning will be incentivized. The government will set up an urban challenge fund of Rs 1 lakh crore to implement the proposals for cities as growth hubs for creative redevelopment of cities. For water and sanitation purposes announced in the July budget,” the Finance Minister said while presenting Budget 2025.
This fund will finance up to 25 percent of the cost of bankable projects, with a requirement that at least 50 percent of the funding comes from bonds, bank loans, or public-private partnerships (PPPs).
An initial allocation of Rs 10,000 crore has been proposed for the fiscal year 2025-26 to kick-start the initiative.
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