PM Modi hails approval of Rs one lakh crore Urban Challenge Fund by Union Cabinet

Prime Minister Narendra Modi has hailed the approval of one lakh crore rupees for the Urban Challenge Fund (UCF) by the Union Cabinet.

In a social media post, Mr Modi said the fund will leverage market finance, private participation and citizen-centric reforms to deliver high-quality urban infrastructure.

He said the initiative will make cities the key drivers of the country’s economic growth.

The Urban Challenge Fund (UCF), a Centrally Sponsored Scheme of the Ministry of Home and Urban Affairs with a total Central Assistance of one lakh crore rupees.

The Fund aims to build resilient, productive, inclusive and climate-responsive cities, positioning those as key drivers of the country’s next phase of economic growth.

The UCF is designed to crowd-in private capital by making projects bankable and reducing risks for lenders and private partners.

The Fund supports up to 25 percent of project cost, subject to raising a minimum 50 percent of the project cost from market, creating a clear pathway for private participation.

The Fund will be operational from Financial Year 2025-26 to Financial Year 2030-31, with an extendable implementation period up to Financial Year 2033-34.

The move will lead to a total investment of four lakh crore rupees in urban sector in the next five years.

It will also mark a paradigm shift in India’s urban development approach from grant-based financing to market-linked, reform-driven and outcome-oriented infrastructure creation.