Centre's Urban Challenge Fund gathers pace with 33 approved projects

The Centre has granted in principle approval to 33 projects under the Urban Challenge Fund (UCF) scheme, Manohar Lal, Minister for Housing and Urban Affairs, has replied to a question raised in the lower house of Parliament.

While the names of the projects and associated amounts have not been disclosed, Odisha tops this list with seven approved projects followed by Gujarat and Madhya Pradesh with six each. Other states with projects ranging from four to one include Andhra Pradesh, Maharashtra, Karnataka, Telangana and Meghalaya.

Launched on 15 April 2026, the UCF has committed to spend ₹1 lakh crore over a mission period that ends 2030-31, but extendable by three years.

UCF targets India’s cities with population of over a million, and supports projects that are financed at least half through market-based sources such as municipal bonds, bank loans or public-private partnerships.

The balance 25 per cent will then by provided for by the Centre and the rest by the state in the form of catalytic support.

In doing so the Union Cabinet expects to mobilise nearly ₹4 lakh crore through an investment of ₹1 lakh crore, while ensuring that Indian cities are fit for finance and such efforts sustainable.

UCF supports the development of urban infrastructure through projects under three verticals called ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’.

Projects under UCF can include areas like digital governance (including mapping of cities with drones, digitisation of property records), development of trunk infrastructure, waste and water recycling facilities, traffic decongestion projects, last mile connectivity, urban flooding projects, redevelopment of old markets, or building pedestrian and cycling paths.

For larger cities, with population two million plus, projects to be funded can include convention centres, recreation spaces, libraries, stadiums and water sports, wellness and meditation centres.

A FICCI-EY report released late July had estimated that India’s cities needed $2.4 trillion by 2050, but municipal corporations had raised only a fraction of that. India’s top 10 cities contribute close to 30 per cent of national GDP, while 36 mid-to-large cities and some 450 smaller centres remain “under-leveraged” despite accommodating a far larger share of urban population.

“Six strategic shifts are proposed: from service delivery to economic leadership; from concentrated growth to a network of growth cities; from fiscal dependence to investment-ready cities; from infrastructure creation to economic competitiveness; from data assets to strategic economic intelligence; and from climate vulnerability to climate resilience,” notes the report.