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The Maharashtra government is planning to establish an Urban Challenge Fund to strengthen urban infrastructure and improve governance across cities. The proposed initiative aims to help urban local bodies overcome financial and administrative hurdles by encouraging innovative funding models, including municipal bonds and public-private partnerships. The fund is expected to support projects across 22 focus areas such as digital governance, mobility, redevelopment, water supply and sanitation. Maharashtra is targeting projects worth INR 44,800 crore under the initiative with financial support from the Centre, the state and market-based funding.
The Maharashtra government is preparing to set up an Urban Challenge Fund to accelerate urban development across the state, with Chief Minister Devendra Fadnavis directing officials to create the mechanism for improving civic infrastructure and urban governance. The proposal is aimed at helping cities address infrastructure gaps through better planning and diversified funding sources.
During a review meeting of the Urban Development Department held recently, Fadnavis said cities should be viewed as engines of economic growth and that the proposed fund would support long-term urban transformation by strengthening civic infrastructure and improving the delivery of public services.
The Chief Minister said Maharashtra has already taken steps to mobilise funds for urban local bodies. He noted that the municipal corporations of Nashik and Pune had successfully raised funds for water supply and sanitation projects after receiving approval from the National Apex Committee (NAC). He further informed that some projects undertaken by the Pimpri Chinchwad and Nagpur municipal corporations are also expected to receive funding through the same mechanism.
Officials at the meeting explained that the proposed Urban Challenge Fund has been designed to address institutional, financial and administrative constraints that often delay urban infrastructure projects, even when central and state government schemes are available. The new funding framework is expected to improve project execution by giving cities greater financial flexibility.
Under the proposal, urban local bodies will be encouraged to raise funds through municipal bonds and public-private partnership (PPP) projects. Municipal bonds have increasingly emerged as an alternative financing tool for city infrastructure in India, allowing local bodies to access capital markets for large-scale public projects while reducing dependence on conventional government grants.
According to the presentation made during the meeting, the Urban Challenge Fund will focus on 22 priority areas covering a wide range of urban development initiatives. These include digital governance, core urban infrastructure, circular economy projects, traffic decongestion, last-mile connectivity, redevelopment of urban areas spread across five to 20 square kilometres, redevelopment of markets and development of small and medium cities as regional growth centres.
The initiative will also support pedestrian- and bicycle-friendly transport infrastructure, demonstration projects, transit hub modernisation, transit-oriented development, creative city redevelopment, urban growth centres, and improvements in water supply and sanitation infrastructure. These focus areas are intended to promote more sustainable and efficient urban development while improving the quality of life for residents.
Officials informed the meeting that the Urban Challenge Fund envisages urban development projects worth around INR 90,000 crore across the country. Maharashtra is expected to secure projects worth INR 44,800 crore under the programme. Of this, INR 11,200 crore each is proposed to come from the Central and Maharashtra governments, while the remaining INR 22,400 crore is expected to be mobilised through market-based funding sources, including municipal bonds and PPP models.
The proposal builds on the Centre's broader push to strengthen urban financing and encourage cities to adopt innovative funding mechanisms for infrastructure creation. In recent years, several urban local bodies across India have explored municipal bonds to finance water supply, sanitation and other civic infrastructure projects as part of efforts to improve financial sustainability and urban service delivery.
Source PTI
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