Union Minister of Housing and Urban Affairs Manohar Lal Khattar announced that 30% of central funds will be released to cities for projects under the ₹1 lakh crore Urban Challenge Fund (UCF) starting in September.
The scheme focuses on market-based finance with a total investment of ₹4 lakh crore in the urban sector from FY 2025-26 to FY 2030-31, extendable by three years.
Private participation can include community-led investment mobilisation, and urban local bodies can designate private entities as 'Special Purpose Urban Infrastructure Manager (SPUIM)' for integrated delivery of housing, civic infrastructure, and operations and maintenance.
The UCF will also focus on urban governance reforms, with states and Union Territories required to submit baseline data on asset registers, land bank inventories, and improved revenue collection.
Funds will be earmarked to states based on their urban population size, with laggards losing out on funding and diversion of funds from slower implementers going to more proactive states.
The guidelines allow projects under digital governance, infrastructure expansion, sustainability, and improved livability, including creation of integrated command and control centres, digital twins, and waste recycling systems.
