NEW DELHI: To encourage states to think innovatively for sustainable urbanisation and redevelopment in existing cities, the govt on Saturday announced setting up of the Urban Challenge Fund (UCF) of Rs 1 lakh crore. The grant for states will be utilised for 25% cost of projects that cities take up. The remaining 75% would be spent by states, including by raising finance in the form of municipal bonds, bank loans and private investment.
Officials said the central grant will help infuse around Rs 4 lakh crore for infrastructure development, achieving saturation and redevelopment projects. They added that for innovative and efficient use of land, states would usher urban reforms related to governance, municipal services, and planning.
In her budget speech, FM Nirmala Sithraman said UCF will be set up to implement proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’, and ‘Water and Sanitation’. “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. An allocation of Rs 10,000 crore is proposed for 2025-26,” she said.
Sources said in the first year itself, cities, which qualify the challenge, would have to fund another Rs 30,000 crore for projects that would be identified. The grant will be for both new and existing cities, they said. “Imagine the impact of overall investment of Rs 4 lakh crore spanning over years — Rs 1 lakh as central grant and another Rs 3 lakh crore by cities — will have on cities,” said a source.
Persuading states to take innovative steps for intensive urban development by improving physical and social infrastructure has become urgent considering that most of cities, including Tier-2 and 3, have witnessed unregulated growth, resulting in inefficient use of scarce land.
TOI on Jan 13 first reported that PM Narendra Modi, while reviewing the urban development sector, had asked officials to focus more on creating facilities, amenities and better transportation network in zones in cities which naturally attract people and businesses, than develop new cities that push horizontal growth.
