## Policy Summary: Funding and Land Acquisition for Urban Infrastructure Development in India (2025-2026)
This document summarizes the Indian government's strategy for addressing funding and land acquisition challenges related to urban infrastructure development, as outlined in response to Lok Sabha Unstarred Question No. 1950 on July 31, 2025.
**Funding:**
The Government of India has announced the establishment of an Urban Challenge Fund (UCF) with a corpus of ₹1 lakh crore in the 2025-2026 budget. This fund aims to support urban infrastructure projects aligned with the "Cities as Growth Hubs," "Creative Redevelopment of Cities," and "Water and Sanitation" initiatives. The UCF will finance up to 25% of the cost of bankable projects, contingent upon a minimum of 50% of project costs being financed through bonds, bank loans, and Public-Private Partnerships (PPPs). The National Bank for Financing Infrastructure and Development, along with other banks and financial institutions, are encouraged to partner with State governments and cities in undertaking projects under this scheme.
**Land Acquisition and Community Concerns:**
Acknowledging that land is a State subject under the Constitution's Seventh Schedule, Article 246, and that Urban Planning falls under the purview of Urban Local Bodies (ULBs) and Urban Development Authorities as per the 12th Schedule, the Government of India supplements state efforts through schematic interventions and advisories. The central government provides financial and technical support to States to strengthen the urban planning ecosystem. The Scheme for Special Assistance to States for Capital Investment (SSASCI), which incentivized states to undertake urban reforms including implementation of Town Planning Schemes (TPS) and Land Pooling Schemes (LPS) during 2023-24 and 2024-25, has been extended for the year 2025-26. Currently, 81 LPS/TPS schemes are in various stages of implementation across 15 States. The government aims to address land acquisition issues and community concerns to ensure the smooth execution of projects, learning from the challenges faced by projects such as the Dharavi Slum Redevelopment in Mumbai.
Key Entities Referenced
National Bank for Financing Infrastructure and Development: A financial institution that the Government intends to interface with to ensure urban infrastructure projects receive adequate and timely funding.
Dharavi Slum Redevelopment in Mumbai: A specific urban project facing challenges, mentioned as an example of projects requiring smooth execution.
Urban Challenge Fund UCF: A fund of 1 lakh crore set up to implement proposals for Cities as Growth Hubs, Creative Redevelopment of Cities and Water and Sanitation.
Cities as Growth Hubs: One of the proposals to be implemented using the Urban Challenge Fund.
Creative Redevelopment of Cities: One of the proposals to be implemented using the Urban Challenge Fund.
Water and Sanitation: One of the proposals to be implemented using the Urban Challenge Fund.
Constitution of India: Refers to Article 246 and 12th Schedule, highlighting land as a State subject and Urban Planning as a function of Urban Local Bodies.
Scheme for Special Assistance to States for Capital Investment Scheme SSASCI Urban Planning Reforms: A scheme implemented by the Government of India during 2023-24 and 2024-25 to incentivise States for undertaking various urban reforms.
GOVERNMENT OF INDIA
MINISTRY OF HOUSING AND URBAN AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO.1950
TO BE ANSWERED ON JULY 31, 2025
FUNDS FOR URBAN INFRASTRUCTURE
NO. 1950. SHRI TANUJ PUNIA:
Will the Minister of HOUSING AND URBAN AFFAIRS be pleased
to state:
(a) the manner in which the Government intends to interface with
the National Bank for Financing Infrastructure and Development
to ensure that urban infrastructure projects receive adequate
and timely funding to meet future demands; and
(b) the details of the steps taken/being taken by the Government to
address land acquisition issues and community concerns to
ensure the smooth execution of projects keeping in view the
challenges faced by projects such as the Dharavi Slum
Redevelopment in Mumbai?
ANSWER
THE MINISTER OF STATE IN THE
MINISTRY HOUSING AND URBAN AFFAIRS
(SHRI TOKHAN SAHU)
(a) & (b): The Government of India, in the budget for 2025-26 has
announced to set up an Urban Challenge Fund (UCF) of ₹1 lakh crore to
implement the proposals for ‘Cities as Growth Hubs’, ‘Creative
Redevelopment of Cities’ and ‘Water and Sanitation’. As per the budget
announcement, this fund would finance up to 25 per cent 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 Public Private Partnerships (PPPs).
Banks and Financial institutions including National Bank for Financing
Infrastructure and Development can partner with the State/ Cities in
taking up the projects under this scheme.
…2/--2-
As per seventh schedule (Article 246) of the Constitution, land is a
State subject. Further, as per 12th Schedule of the Constitution, Urban
Planning is the function of Urban Local Bodies (ULBs)/ Urban Development
Authorities. Government of India supplements the efforts of the States
through schematic interventions/ advisories. It provides financial and
technical support to the States to strengthen Urban Planning ecosystem.
The Government of India implemented the Scheme for Special
Assistance to States for Capital Investment Scheme (SSASCI) (Urban
Planning Reforms) during 2023-24 and 2024-25 in which, States were
incentivised for undertaking various urban reforms including
implementation of Town Planning Schemes (TPS) and Land Pooling
Schemes (LPS). The TPS/ LPS reform component of the scheme has been
extended for the year 2025-26. 81 LPS/TPS schemes in 15 States are at
various stages of implementation.
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