New Delhi: In a major boost to urban development, Finance Minister Nirmala Sitharaman announced the establishment of a ₹1 lakh crore Urban Challenge Fund while presenting the Union Budget 2025-26 in Parliament. The fund will support ‘Cities as Growth Hubs’, ‘Creative Redevelopment of Cities’, and ‘Water and Sanitation’ initiatives, with an initial allocation of ₹10,000 crore for the upcoming fiscal year.
The Urban Challenge Fund will finance up to 25% of the cost of bankable projects, with the requirement that at least 50% of the cost is raised through bonds, bank loans, or public-private partnerships (PPPs). This move aims to attract private investments and accelerate urban transformation across the country.
National Geospatial Mission to Enhance Urban Planning
The budget also introduced a National Geospatial Mission to modernize land records, urban planning, and infrastructure design using the PM Gati Shakti framework. The mission will develop foundational geospatial infrastructure and data, enabling efficient city management and improved planning for future growth.
Empowering Urban Poor and Gig Workers
Emphasizing the government’s commitment to urban workers, Sitharaman announced a socio-economic upliftment scheme to help urban poor enhance their incomes, achieve sustainable livelihoods, and improve their quality of life.
Recognizing the role of gig workers in India’s digital economy, the government will now provide identity cards and registration on the e-Shram portal to nearly 1 crore gig workers employed in online platforms and app-based services. Additionally, these workers will be covered under the PM Jan Arogya Yojana (PMJAY), ensuring them access to affordable healthcare.
PM SVANidhi Revamp to Boost Street Vendors
Building on the success of the PM SVANidhi scheme, which has benefitted over 68 lakh street vendors, the government has proposed a revamp to enhance financial support. Key changes include:
- Increased loan amounts from banks
- UPI-linked credit cards with a ₹30,000 limit
- Capacity-building support to improve business sustainability
These measures are expected to reduce dependence on high-interest informal loans and empower street vendors with easier access to financial resources.
SWAMIH Fund 2 for Affordable Housing
Addressing concerns in the housing sector, Sitharaman announced the completion of 50,000 dwelling units under the Special Window for Affordable and Mid-Income Housing (SWAMIH) initiative, with an additional 40,000 units to be delivered in 2025.
To expedite stalled housing projects, the government will establish SWAMIH Fund 2, a ₹15,000 crore blended finance facility backed by contributions from the government, banks, and private investors. This fund aims to complete another 1 lakh housing units, providing relief to middle-class families struggling with EMIs and rental expenses simultaneously.
A Roadmap for Urban Transformation
With historic investments in urban infrastructure, housing, and worker welfare, the Union Budget 2025-26 sets a strong foundation for sustainable and inclusive urban development. By leveraging innovative funding mechanisms, digital governance, and private sector participation, the government aims to transform Indian cities into vibrant economic and residential hubs, driving the vision of Viksit Bharat.
