Union Minister Manohar Lal Launches Urban Challenge Fund Guidelines to Boost India’s City Infrastructure Push

New Delhi April 15 2026: Union Housing and Urban Affairs Minister Manohar Lal Khattar on Wednesday launched the operational guidelines for the Urban Challenge Fund along with the Credit Repayment Guarantee Sub Scheme in New Delhi, marking a major step towards strengthening urban infrastructure financing in India.

The ₹1 lakh crore Urban Challenge Fund is designed to act as a catalytic mechanism to attract nearly ₹4 lakh crore in total investment by encouraging market based financing. The scheme aims to support projects in Tier II and Tier III cities with a strong focus on sustainable and scalable urban development.

The Minister said the fund will go beyond traditional grants and instead promote financial discipline by requiring a significant share of funding through municipal bonds, bank loans and public private partnerships. He added that the approach is intended to make cities more financially self reliant and investment ready.

Out of the total allocation, ₹90,000 crore will be directed towards projects, while ₹5,000 crore will support project preparation and capacity building. Another ₹5,000 crore has been set aside for the credit guarantee sub scheme, which will help smaller and hilly region cities access market financing.

The initiative will support redevelopment of old city areas, urban mobility projects, last mile connectivity systems, non motorised transport and water and sanitation infrastructure, along with climate resilient urban development projects.

Officials from the Ministry of Housing and Urban Affairs said the programme represents a shift towards a reform driven and outcome oriented model of urban growth, with strong emphasis on financial sustainability and institutional strengthening of urban local bodies.

The scheme will be implemented between financial year 2025–26 and 2030–31 as part of efforts to transform Indian cities into major engines of economic growth and development.