New Delhi, April 15 (NationPress) Union Minister for Housing and Urban Affairs, Manohar Lal, unveiled the operational guidelines for the Urban Challenge Fund (UCF) alongside the Credit Repayment Guarantee Sub-Scheme (CRGSS) on Wednesday. The ambitious Rs 1 lakh crore fund aims to attract nearly four times the investment via market-driven financing.

During the launch event, the minister remarked that the UCF signifies a transformative shift in India's urban development strategy, emphasizing the importance of utilizing public resources to catalyze greater investments and enhance the financial resilience of cities.

He highlighted that urban areas are becoming vital engines for economic prosperity, innovation, and job creation, asserting that the successful realization of 'Viksit Bharat 2047' hinges on robust urban planning, financing, and governance.

While initiatives like AMRUT, Swachh Bharat Mission, and Smart Cities Mission have bolstered infrastructure, the next phase necessitates that cities achieve financial sustainability and readiness for investment, he added.

The UCF, with central assistance amounting to Rs 1 lakh crore, is crafted to mobilize close to four times the investment through market-oriented financing strategies. Central assistance will be limited to 25% of the project cost, with at least 50% sourced through municipal bonds, loans from banks, and public-private partnerships (PPPs).

Of the total allocation, Rs 90,000 crore is designated for projects, Rs 5,000 crore for project preparation and capacity enhancement, and another Rs 5,000 crore for the CRGSS.

The CRGSS is particularly aimed at aiding smaller cities, including Tier-II and Tier-III cities and those in hilly and northeastern areas, by facilitating access to market-based financing through credit guarantees.

Additionally, the fund is set to support various initiatives such as the revitalization of old urban areas and markets, improving urban mobility and last-mile connectivity, enhancing non-motorized transport, and developing water and sanitation infrastructure, as well as promoting climate-resilient urban growth, according to the minister.

He stressed the critical role of Urban Local Bodies (ULBs) in elevating their financial capabilities, embracing reforms, and engaging in market-based financing mechanisms.

Srinivas Katikithala, Secretary of the Ministry of Housing and Urban Affairs, remarked that India's urbanization is at a pivotal juncture, with the UCF introducing a framework focused on market linkage, reform orientation, and outcome-driven infrastructure development.

A digital directory connecting cities with financial institutions, banks, and credit rating agencies was also launched to aid the fund's implementation.

The event included the formal signing of a memorandum of understanding between the ministry and all states, along with Letters of Intent with financial institutions, knowledge partners, and private sector entities to bolster financing, capacity building, and the execution of urban projects.

The government has stated that the UCF will be operational from FY26 to FY31, aiming to transform cities into dynamic growth centers.