**Summary:**
The Ministry of Housing and Urban Affairs announced the establishment of the Urban Challenge Fund (UCF) in response to Lok Sabha Unstarred Question No. 1923 on July 31, 2025. The UCF, announced in the 2025-26 budget, aims to support urban development projects focused on "Cities as Growth Hubs," "Creative Redevelopment of Cities," and "Water and Sanitation." A total fund of ₹1 lakh crore has been proposed, with ₹10,000 crore allocated for the financial year 2025-26. The UCF is designed to finance up to 25% of bankable project costs, stipulating that at least 50% of the project cost must be funded through bonds, bank loans, or Public-Private Partnerships (PPPs). The objective is to enhance urban resilience and economic productivity through integrated urban planning, land-use efficiency, and sustainable financing. The Draft Expenditure Finance Committee (EFC) Note for the UCF initiative is currently under Inter-Ministerial Consultation. Details regarding city selection criteria, eligible urban innovation projects, proposal submission processes from States and Urban Local Bodies (ULBs), project implementation timelines, and monitoring and evaluation mechanisms are not yet available as the initiative is still in the planning and consultation stages. Information regarding proposals submitted by cities in Karnataka, including Mangaluru, is also unavailable at this time. Further details will be released upon completion of the Inter-Ministerial Consultation and finalization of the UCF framework. Shri Tokhan Sahu, the Minister of State in the Ministry of Housing and Urban Affairs, provided the response to the Lok Sabha question.
Key Entities Referenced
Ministry of Housing and Urban Affairs: The Indian government ministry responsible for housing and urban development.
Urban Challenge Fund: A proposed fund to support urban innovation projects in India.
SHRI CAPTAIN BRIJESH CHOWTA: Member of Parliament who raised the question about the Urban Challenge Fund.
SHRI TOKHAN SAHU: The Minister of State in the Ministry of Housing and Urban Affairs, who provided the answer.
Karnataka: A state in India from which proposals were invited under the Urban Challenge Fund.
Mangaluru: A city in Karnataka, India that may have submitted proposals under the Urban Challenge Fund.
Dakshina Kannada: A district in Karnataka, India containing urban centers that may have submitted proposals.
Cities as Growth Hubs: One of the proposed project types to be funded under the Urban Challenge Fund.
GOVERNMENT OF INDIA
MINISTRY OF HOUSING AND URBAN AFFAIRS
LOK SABHA
UNSTARRED QUESTION NO.1923
TO BE ANSWERED ON JULY 31, 2025
URBAN CHALLENGE FUND
NO. 1923. SHRI CAPTAIN BRIJESH CHOWTA:
Will the Minister of HOUSING AND URBAN AFFAIRS be pleased to state:
(a) the objectives and key features of the Urban Challenge Fund including
the criteria set for city selection and the types of urban innovation
projects eligible for the same;
(b) the total funds allocation proposed thereunder and whether the
funding would be performance-linked or demand-driven;
(c) whether the Government has invited proposals from States and Urban
Local Bodies (ULBs) and if so, the details thereof along with the
number of proposals received and approved so far;
(d) whether any cities from Karnataka, particularly Mangaluru or other
urban centres in Dakshina Kannada have submitted proposals under
the Urban Challenge Fund and if so, the details and the current status
thereof; and
(e) the timeline fixed for implementation of approved projects and the
mechanism put in place for monitoring and evaluation of outcomes?
ANSWER
THE MINISTER OF STATE IN THE
MINISTRY OF HOUSING AND URBAN AFFAIRS
(SHRI TOKHAN SAHU)
(a) to (e): 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.
The objective is to enhance urban resilience and economic productivity
through integrated urban planning, land-use efficiency, and sustainable
financing.
The Draft Expenditure Finance Committee (EFC) Note for UCF
initiative is at Inter-Ministerial Consultation stage.
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