Digital Governance
CCC, digitization of property records, utilities, Digital Twin, etc.
Urban Challenge Fund
Guidelines for transformative urban infrastructure
Aim: India's urbanisation is entering a decisive phase, with cities driving economic growth while facing infrastructure gaps, climate vulnerabilities, and fiscal constraints. The Urban Challenge Fund (UCF) introduces a market-linked, reform-driven approach to urban infrastructure financing. With a Central Assistance pool of ₹1 lakh crore, the Fund supports the development of bankable projects, strengthens institutional capacity, and promotes sustainable urban development through improved governance, planning, and financing.
UCF Guidelines document
Download the complete source document for detailed information.
UCF Objectives
A paradigm shift in urban financing
01
Encourage Economic Growth
Encourage cities to become engines of economic growth.
02
Transformative Projects
Promote transformative urban infrastructure projects.
03
Governance and Planning
Improve Urban Governance and undertake deep Spatial & Urban Planning reforms.
04
Financial Capacity
Increase the financial capacity of ULBs.
05
Private Investment
Mobilise private investment for urban infra.
06
Service Delivery
Enhance service delivery through innovative urban reforms.
Funding StructureFrom Mission Outlay to
From Mission Outlay to
Individual Project Financing
Mission Outlay₹1,00,000 Cr.Central Assistance Pool
Catalytic support for urban infrastructure
Central Assistance is designed to leverage significantly larger investments from market-based sources while supporting financially viable and sustainable projects.
FY25–26FY30–31
6-Year MissionExtendable by 3 Years
Central Assistance Pool
Allocation across three componentsSelect a funding component to view details
Support for approved infrastructure projects
The Project Fund supports approved projects across the three UCF verticals and serves as catalytic support to leverage market-based financing, enable structured implementation and support timely execution of financially viable and reform-linked urban infrastructure investments.
10%Additional projects may be considered beyond the allocated limit for States/UTs.
2 yearsState/UT-wise progress will be reviewed after 2 years by the National Apex Committee.
PopulationInter-se allocation among States/UTs will be broadly based on respective population.
For Individual Projects
Blended project financing mix
Up to 25%
Central Assistance
Catalytic support for bankable projects.
50% 75%
Market based Finance
Bonds, bank loans and PPPs constitute the primary
source of project funding.
Upto 25%
ULB / State Share
Balance project contribution from the Urban Local Body or State.
Thematic DevelopmentThe Urban Challenge Fund supports projects across 3
The Urban Challenge Fund supports projects across 3
thematic areas to accelerate sustainable urban development
Cities as Growth Hubs
Creative Redevelopment of Cities
Water & Sanitation
Positioning cities as a bankable asset class through targeted reforms:
Urban Governance
Urban Finance
Urban Planning
Service Delivery
Financial Management
Institutional Capacity
UCF Coverage
Who can participate
In principle, all the ULBs are eligible to participate in UCF
Population ≥10 Lakh
All cities with projected 2025 population of 10 lakh or more.
Capital Cities
Capital cities of States/UTs not included in first category.
Major Industrial Cities
Manufacturing & services cities with population ≥1 lakh.
Special Categories
- All ULBs in Hilly States/UTs, Northeast States
- ULBs with population below 1 lakh in other States/UTs
- Focus on Tier II & III Cities
Admissible projects under UCF
Showing 18 projects under All
Redevelopment of Old Markets
Comprehensive redevelopment of markets and business hubs.
Development of Trunk Infrastructure
Underground ducts, SCADA systems, water and sewerage management projects.
Non-motorised Transport Infrastructure
Pedestrianisation, cycling paths, integrated vending spaces and covered walkways.
Circularity
Reuse water grids, material recovery facilities and waste-to-energy infrastructure.
Transit Hub Upgradation
Upgradation of existing bus depots, railway stations and related infrastructure.
Projects for Decongestion
Multi-level car parking and stack-parking infrastructure.
TOD Infrastructure Development
Transform transit-oriented development areas for planned densification.
Last Mile Connectivity Infrastructure
Transit hubs, multimodal integration and last-mile connectivity projects.
Prevention of Urban Flooding
Systematic drainage networks and sponge-city infrastructure.
Revitalization of Old City Areas
Integrated revitalization covering approximately 5 to 20 sq. km.
Integrated Waste Processing
Construction and demolition waste, waste-to-energy and liquid-waste processing.
Greenfield and Semi-Greenfield City Infrastructure
Integrated infrastructure development for emerging urban areas.
Riverfront Development in the City
Integrated and sustainable riverfront development.
Road Infrastructure and Flyovers
Development and improvement of road infrastructure and flyovers.
Projects for Implementation of Reforms
Land-bank inventory systems and digitized project-monitoring systems.
Uncovered Projects under Different Schemes
Eligible urban projects not covered under other government schemes.
Relocation of Small Dairy Enterprises
Relocation of small dairy enterprises with milch cattle from city limits.
Second level priority projects in 2 million+ cities
Development of convention centres
Development of recreation spaces
Creating state of the art public libraries
Sports infrastructure