The National Housing Bank will soon disburse the first tranche of loans to fund ongoing projects in tier-2 and tier-3 cities under the Urban Infrastructure Development Fund (UIDF).

Urban Infrastructure Development Fund (UIDF)

• Urban infrastructure in India refers to the basic physical structures, facilities and  services needed for the functioning of cities and towns. It includes roads, bridges, water supply and sewage systems and area development projects.

• The state of urban infrastructure in India is a major challenge, with many cities facing issues such as traffic congestion, air and water pollution, and inadequate housing and public services.

Urban Infrastructure Development Fund (UIDF)

• In the Union Budget 2023-24, Finance Minister Nirmala Sitharaman announced that Urban Infrastructure Development Fund (UIDF) will be established through use of priority sector lending shortfall. 

• UIDF is managed by the National Housing Bank, and will be used by public agencies to create urban infrastructure in tier-2 and tier-3 cities.

• The initial corpus for this fund is Rs 10,000 crore.

• UIDF aims to supplement efforts of state governments/UTs for urban infrastructure development work implemented through state agencies, municipal corporations, Urban Local Bodies (ULBs) in tier-2 and tier-3 cities by providing a stable and predictable source of financing. 

• It allows for pooling of resources and expertise, enabling creation of comprehensive infrastructure solutions that address the unique needs of each urban area. 

• To address the problem of skewed regional development, UIDF will focus on cities/ULBs in the population group of 50,000 to 9,99,999 as per latest Census data covering about 40 per cent of the urban population.

a) Tier-2 cities - 459 towns with population between one lakh to 9,99,999 as per latest Census data.

b) Tier-3 cities - 580 towns with population between 50,000 to 99,999 as per latest Census data. 

• Focus will be on basic services like sewerage and solid waste management, water supply and sanitation, construction and improvement of drains/storm water drains, etc and impact-oriented projects would be prioritised.

• UIDF would focus on mid-sized cities with the potential to develop them into regional economic hubs, while keeping the metropolitan and mega cities outside its scope.

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