**Executive Summary**
This document is the answer to Unstarred Question No. 852 in Lok Sabha, scheduled for December 4, 2025, regarding the implementation status of the Urban Challenge Fund (UCF) and the Industrial Housing Scheme, both announced in the Union Budget 2025-26. It details fund allocations, project parameters, and eligibility criteria, noting that the schemes are still under consideration, and proposals will be invited once approved.
**Key Points / Main Content**
* **Urban Challenge Fund (UCF) Details**
* A ₹1 lakh crore UCF will be established to implement proposals for "Cities as Growth Hubs," "Creative Redevelopment of Cities," and "Water and Sanitation."
* The fund will finance up to 25% of the cost of bankable projects.
* At least 50% of the project cost must be funded from bonds, bank loans, and Public Private Partnerships (PPPs).
* ₹10,000 crore is allocated in the budget for the financial year 2025-26.
* **Industrial Housing Scheme Details**
* Rental housing with dormitory-type accommodation for industrial workers will be facilitated in PPP mode.
* Viability Gap Funding (VGF) support and commitment from anchor industries will be provided.
* ₹2,500 crore has been provisioned for this purpose for 2025-26.
* **Scheme Status and Future Actions**
* Schemes for UCF and rental housing for industrial workers are currently under consideration.
* Eligibility norms and participation criteria will be finalized after the schemes are approved.
* Proposals will be invited after the approval of the schemes and finalization of the norms and criteria.
**Impact Analysis**
**Government of India, Ministry of Housing and Urban Affairs**
* **Impact:** Responsible for the finalization, approval, and implementation of the UCF and Industrial Housing Scheme.
* **Action Required:** Finalize the schemes, eligibility norms, and participation criteria, and then invite proposals.
**Cities and Urban Areas**
* **Impact:** Intended beneficiaries of the UCF, with potential for growth hubs, creative redevelopment, and improved water and sanitation.
* **Action Required:** Prepare and submit proposals for projects that align with the objectives of the UCF, once the scheme details are finalized.
**Industrial Workers**
* **Impact:** Will benefit from the Industrial Housing Scheme, providing access to rental housing with dormitory-type accommodation.
* **Action Required:** Await the finalization of the Industrial Housing Scheme and the development of suitable housing options.
**Investors and Private Sector**
* **Impact:** Potential funding and partnership opportunities via bonds, bank loans, and Public Private Partnerships (PPPs).
* **Action Required:** Monitor the progress of both schemes and prepare to participate in projects once details and eligibility criteria are released.
Key Entities Referenced
Urban Challenge Fund (UCF): A fund of ₹1 lakh crore announced in the Union Budget 2025-26 to implement proposals for 'Cities as Growth Hubs', 'Creative Redevelopment of Cities', and 'Water and Sanitation'.
Union Budget: The annual financial statement where the Urban Challenge Fund and the Industrial Housing Scheme were announced (specifically the 2024-25 and 2025-26 budgets).
Ministry of Housing and Urban Affairs: The central ministry responsible for the implementation of the Urban Challenge Fund and related schemes.
Industrial Housing Scheme: A scheme related to rental housing for industrial workers, announced in the Union Budget, to be facilitated through public-private partnership (PPP) with Viability Gap Funding (VGF) support.
GOVERNMENT OF INDIA
MINISTRY OF HOUSING AND URBAN AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO. 852
TO BE ANSWERED ON DECEMBER 04, 2025
IMPLEMENTATION OF URBAN CHALLENGE FUND AND INDUSTRIAL
HOUSING SCHEME
NO. 852. SHRI TANGELLA UDAY SRINIVAS:
Will the Minister of Housing and Urban Affairs be pleased to state:
(a) the present implementation status of the Urban Challenge Fund and
the Industrial Housing Scheme announced in the Union Budget 2025-
26 along with the timelines set for finalising guidelines and releasing
funds;
(b) the number of proposals received under each scheme, State/UT-
wise including the proposals received from Andhra Pradesh;
(c) the status of each proposal-approved, under evaluation or rejected
along with the reasons for rejection thereof;
(d) the funds allocated, sanctioned and disbursed under each scheme
since their inception, State/UT-wise;
(e) the eligibility norms and financial participation criteria being
considered including Public-Private Partnership (PPP), bond
financing and private investment requirements; and
(f) whether any pilot or model projects are proposed for early rollout
under either scheme and if so, the details of sectors and
locations thereof?
ANSWER
THE MINISTER OF STATE IN THE
MINISTRY HOUSING AND URBAN AFFAIRS
(SHRI TOKHAN SAHU)
(a) to (f): 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 is planned to 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). ₹10,000 crore has been allocated for the financial year 2025-26 in
the budget announcement.
…2/--2-
In the Union Budget 2024-25, Government has announced rental
housing with dormitory-type accommodation for industrial workers to be
facilitated in public-private partnership (PPP) mode with Viability Gap
Funding (VGF) support and commitment from anchor industries. For this
purpose, ₹2,500 crore has been provisioned for 2025-26.
The Schemes for UCF and rental housing for industrial workers are
under consideration. After approval of the schemes, the eligibility norms
and participation criteria will be finalized and proposals will be invited.
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