Budget 2025: What is the urban challenge fund announced by FM Sitharaman?

Union Budget 2025: Finance Minister Nirmala Sitharaman in her eighth budget presentation announced certain measures for urban reforms. She mentioned the setting up of an Urban Challenge Fund, as well as invoked the July Budget 2024 proposal. 

She said that building on the July Budget 2024 proposals, urban sector reforms related to governance, municipal services, urban land, and planning will be incentivised.

FM Sitharaman said that the government will also set up the Urban Challenge Fund for Rs 1 lakh crore.

WHAT IS THE URBAN CHALLENGE FUND?

The Urban Challenge Fund, with an outlay of Rs 1 lakh crore, will be set up to implement the proposals for ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’ and ‘Water and Sanitation’ announced in the July Budget.

The fund will finance up to 25 per cent of the cost of the bankable projects with a stipulation that at least 50 per cent of the cost is funded from bonds, bank loans and private-public partnerships. 

FM Sitharaman said that an allocation of Rs 10,000 crore is proposed for 2025-26.

FM’S BUDGET 2025 ANNOUNCEMENTS

FM Sitharaman said in her Budget 2025-26 that the government has been giving priority to assisting the urban poor and vulnerable groups. 

She announced the setting up of a scheme for socio-economic upliftment of urban workers to help improve their incomes, have sustainable livelihoods and a better quality of life.