Budget 2025: Finance Minister Nirmala Sitharaman announced one lakh crore Urban Challenge Fund in a bid to transform urban landscapes across the country The fund is designed to drive key urban sector reforms, focusing on governance, municipal services, urban land management, and planning, while promoting cities' development as economic growth hubs.  

The Government aims to boost the creative redevelopment of cities and improve critical services like water and sanitation, with a focus on sustainability and inclusivity. The Urban Challenge Fund will finance up to 25 per cent of the cost of bankable projects, with the stipulation that at least 50 per cent of the project costs are funded through bonds, bank loans, or public-private partnerships (PPPs).  

An allocation of `10,000 crore has been earmarked for the 2025-26 financial year to kickstart the implementation of these vital initiatives. This forward-thinking initiative is expected to foster infrastructural growth and enhance the livability of cities, paving the way for urban prosperity across the nation.  

The fund is part of the government’s broader vision to reshape urban India, fostering economic dynamism, environmental sustainability, and social well-being in cities.