Smaller cities such as Nashik and Warangal are set to be among the early movers in accessing the Centre's ₹4 lakh crore Urban Challenge Fund (UCF), which is expected to roll out in April.
The UCF, announced by finance minister Nirmala Sitharaman in last year's Union Budget, is a centrally sponsored scheme to support projects under three verticals: developing cities as growth hubs; water and sanitation; and redevelopment of urban areas with ageing infrastructure.
Cities of all sizes will be eligible for funding under the scheme, with at least 50% of the project financing coming from market-based sources, while the Centre will cover 25% of the cost.
Nashik is preparing two projects with a combined cost of ₹1,058.88 crore, including a ₹400 crore plan to improve water supply and a ₹225 crore "Clean Godavari" project to expand sewer lines.
The Greater Warangal Municipal Corporation is proposing two key projects under the UCF, including an underground drainage system, with half of the project funded through loans from multilateral agencies.
Experts say that smaller cities leading in accessing UCF demonstrates project viability and growing institutional readiness, but the real test will be whether these investments translate into stronger local economies and tangible improvements in urban service delivery.
