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Informist, Saturday, Feb. 1, 2025

--BUDGET: To incentivise urban sector reforms related to governance, planning 

--BUDGET: INR 1-tln urban challenge fund to set up cities as growth hubs 

--BUDGET: Allocate INR 100 bln for Urban Challenge Fund for FY26 

--BUDGET: Urban Challenge Fund to finance up to 25% of bankable projects 

--BUDGET: Extend Jal Jeevan Mission until 2028 with enhanced total outlay 

--BUDGET: Jal Jeewan Mission to focus on quality infra for piped water 

--BUDGET: To sign MoU with states under Jal Jeewan Mission 

NEW DELHI – An 'Urban Challenge Fund' of INR 1 trillion will be set up to implement several proposals for the development of cities announced in last year's Budget, including those related to governance, municipal services, and planning, Finance Minister Nirmala Sitharaman said while presenting the Union Budget for 2025-26 (Apr-Mar) on Saturday.

The fund will be used to implement the proposals for 'Cities as Growth Hubs', 'Creative Redevelopment of Cities' and 'Water and Sanitation', which were announced in the full Budget for FY25, presented on Jul. 23.

Enumerating strategies to transform urban areas, the government had announced in the union budget FY25 that it would work with states to develop cities as growth hubs through economic and transit planning. It had also announced a framework for creative redevelopment of existing cities. Last year, the government had announced the promotion of water supply, sewage treatment, and solid waste management projects in 100 large cities. 

The fund announced will finance up to 25% of the cost of such bankable projects, for which 50% of funding would be from bonds, bank loans, and public-private partnership. For FY26, the government allocated INR 100 billion to the fund.

The government also extended the Jal Jeevan Mission till 2028 with an enhanced budget outlay to achieve 100% coverage of rural households. Since 2019, the potable tap water connections have reached 150 million households, representing 80% of the rural population, Sitharaman said. She said the mission's focus would be on the quality of infrastructure and operation and maintenance of rural piped water supply schemes through 'Jan Bhagidhari'. The government will sign a separate memorandum of understanding with states and Union territories to ensure water service delivery.  End

Reported by Sourabh Kumar

Edited by Avishek Dutta

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