New Delhi, February 14 The Union Cabinet has approved the launch of the Urban Challenge Fund (UCF) with a total central assistance of ₹1 lakh crore, Union Minister Ashwini Vaishnaw said on Saturday.
Under the scheme, central assistance will cover 25 per cent of a project's cost, provided that at least 50 per cent of the funding is mobilized from the market.
In a statement, the government said the initiative will lead to a total investment of ₹4 lakh crore in the urban sector over the next five years.
The move marks a paradigm shift in India's urban development approach from grant-based financing to a market-linked, reform-driven, and outcome-oriented infrastructure creation, it said.
The UCF will leverage market financing, private sector participation, and citizen-centric reforms to deliver high-quality urban infrastructure, it said.
The fund aims to build resilient, productive, inclusive, and climate-responsive cities, positioning them as key drivers of the country's next phase of economic growth, according to the statement.
The UCF will be operational from FY 2025-26 to FY 2030-31, with an extendable implementation period up to FY 2033-34.
It gives effect to the government's vision announced in Budget 2025-26 to implement proposals relating to cities as growth hubs, creative redevelopment of cities, and water and sanitation.