New Delhi: Union Minister for Housing and Urban Affairs (MHUA) Manohar Lal on Saturday said that the ‘Urban Challenge Fund’ announced by Finance Minister Nirmala Sitharaman in the budget will play a key role in promoting urban sector reforms related to municipal services, urban land and planning.
“The initiative is going to drive the transformation of cities into growth hubs, support creative redevelopment, and enhance water and sanitation infrastructure,” said Manohar Lal.
Urban Challenge Fund
Sitharaman, while presenting the Budget 2025-2026 in the Parliament said that the Government will set up an Urban Challenge Fund of Rs 1 lakh crore to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’ announced in the July Budget.
“This fund will finance up to 25 percent of the cost of bankable projects with a stipulation that at least 50 per cent 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.
The Budget has proposed that a National Geospatial Mission will be started to develop foundational geospatial infrastructure and data. Using PM Gati Shakti, this Mission will facilitate modernization of land records, urban planning, and design of infrastructure projects.
Urban Workers
Finance Minister Sitharaman said that the Government has been giving priority to assisting urban poor and vulnerable groups. A scheme for socio-economic upliftment of urban workers will be implemented to help them improve their incomes, have sustainable livelihoods and a better quality of life.
Recognising the contribution of Gig workers who provide great dynamism to the new-age services economy, Sitharaman also announced the arrangement of arranging their identity cards and registration on the e-Shram portal.
They will be provided healthcare under PM Jan Arogya Yojana. This measure is likely to assist nearly 1 crore gig-workers.
Revamping PM SVANidhi Scheme
The Finance Minister highlighted that the PM SVANidhi scheme has benefitted more than 68 lakh street vendors giving them respite from high-interest informal sector loans. Building on this success, the scheme will be revamped with enhanced loans from banks, UPI linked credit cards with Rs 30,000 limit, and capacity building support.
Special Window for Affordable and Mid-Income Housing Scheme
Sitharaman highlighted that Under the Special Window for Affordable and Mid-Income Housing (SWAMIH) fifty thousand dwelling units in stressed housing projects have been completed, and keys handed over to home-buyers. Another forty thousand units will be completed in 2025, further helping middle-class families who were paying EMIs on loans taken for apartments, while also paying rent for their current dwellings.
Building on this success, SWAMIH Fund 2 will be established as a blended finance facility with contributions from the Government, banks and private investors. This fund of Rs 15,000 crore will aim for expeditious completion of another 1 lakh units.
Experts View
Talking to ETV Bharat, renowned urban affairs expert and professor (urban management) and coordinator, Centre for Urban Studies, Indian Institute of Public Administration (IIPA) Prof KK Pandey gave his mixed reaction over the budget.
“We already have the Urban Infrastructure Development Fund (UIDF) announced in 2023-24. And this time, the government announced the formation of the Urban Challenge Fund. Is the new announcement replacing the previous one?” asked Prof Pandey.
The Urban Infrastructure Development Fund established through Priority Sector Lending Shortfall for Public Agencies to create urban infrastructure in Tier 2 & Tier 3 cities with an annual corpus of Rs 10,000 crore.
Pandey, however, said that implementation of the urban challenge fund may be a challenge. “The urban challenge fund is for big cities. What will happen to small cities? Under this scheme, 50 per cent of the cost will be funded through bonds, bank loans, and PPPs. We will have to wait to see its implementation process,” said Prof Pandey.
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