URBAN INFRASTRUCTURE DEVELOPMENT FUND – POLITY

News: UIDF: Funding Boost for Tier-2 and Tier-3 Cities in India

 

What's in the news?

       The Urban Infrastructure Development Fund (UIDF), as announced in the FY24 Budget, is set to disburse its first tranche of loans soon which is intended to fund ongoing projects in tier-2 and tier-3 cities, according to officials from the Union Housing and Urban Affairs Ministry (MoHUA).

 

Key takeaways:

       States are also in the process of preparing proposals for new projects. The state governments and Union Territories have been asked to submit proposals for projects worth Rs 5 crore to Rs 100 crore by September-end.

       The UIDF has been introduced to provide low-cost loans to 459 tier-2 cities with a population between 1 lakh and 9,99,999, as well as 580 tier-3 towns with a population between 50,000 and 99,999, according to the 2011 Census.

       The National Housing Bank (NHB), responsible for executing the UIDF, issued guidelines in July and requested states to submit their proposals by September.

 

Urban Infrastructure Development Fund:

       It is established through the use of priority sector lending shortfall.

 

Management: National Housing Bank (NHB).

 

Features:

       It is used by public agencies to create urban infrastructure in Tier 2 and Tier 3 cities.

       The Centre will spend ₹10,000 crore per year for the fund.

       It is used for the efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, enhanced availability and affordability of urban land, and opportunities for all.

       It will encourage urban planning reforms and actions to transform cities into “sustainable cities of tomorrow.

 

Other measures:

       The cities will be incentivised to improve their credit worthiness for municipal bonds.

       This will be done through property tax governance reforms and ring-fencing user charges on urban infrastructure.

       All cities and towns will be enabled for 100% mechanical desludging of septic tanks and sewers to transition from manhole to machine-hole mode and the increased focus will be provided for scientific management of dry and wet waste.

 

Eligible Products:

       The UIDF can provide funding for projects such as water supply, sanitation, road construction, comprehensive area development, local area planning for decongestion, heritage conservation, town-planning schemes, and parks with open gyms that do not involve major construction.

       Further, the funding can be combined with funding under other schemes of the Ministry such as Swachh Bharat Mission and AMRUT.