Urban Infra Fund sees Tepid Demand in Tier-2 & Tier-3 Cities

Less than Rs. 7,000 crores of the Rs. 10,000 crores allotted annually under the scheme has been sanctioned over the course of the two fiscal years.

There has been little demand for the Urban Infrastructure Development Fund (UIDF), which was introduced in the 2023–24 Budget for 459 tier-2 and 580 tier-3 cities, despite the Center's persistent calls for increased capital expenditure on infrastructure and an emphasis on urban development. Subject to anonymity, National Housing Bank (NHB) officials stated that less than Rs. 7,000 crores of the Rs. 10,000 crores allotted annually under the scheme has been sanctioned over the two fiscal years.

States may use the program to obtain loans for a variety of purposes, including area planning and development, water and sanitation, and road construction, at a 1.5% discount from the going bank rate. According to an NHB official in charge of these funds, nearly half of the Rs. 6,850 crores approved as of December 15 will go toward funding the state’s share of projects funded by the federal government's AMRUT 2.0 and SBM 2.0 programs.

According to HT, the Union Ministry of Housing and Urban Affairs (MoHUA) approved these projects as part of the plan to address the state’s lack of interest. It should be mentioned that out of the Rs. 6,850 crore projects, the detailed project reports for the Rs. 1,050 crore projects have not yet been submitted, which is the basis on which funds are sanctioned. Even states like Gujarat and Maharashtra, who typically take the lead in utilizing MoHUA funds, have been sluggish to adopt this program.