Tepid demand for urban infra fund for tier-2 and tier-3 cities

New Delhi: Under the scheme, states can avail of loans at a discounted rate of 1.5% from the prevailing bank rate for roadworks, water and sanitation, area planning and development projects, among others. Despite the Centre’s continued push for higher capital expenditure on infrastructure and emphasis on urban development, the Urban Infrastructure Development Fund introduced in the 2023-24 Budget for 459 tier-2 and 580 tier-3 cities has seen tepid demand. Even among the ₹6,850 crore sanctioned as of December 15, close to half of it will be used to fund states’ share of projects under central government’s AMRUT 2.0 and SBM 2.0, an NHB official managing these funds said. Most states are yet to reach their normative allocation and at least four major states—Uttar Pradesh, West Bengal, Odisha and Madhya Pradesh—are yet to be sanctioned a rupee under UIDF, a second NHB official said. Tathagata Chatterji, an urban governance expert and professor at Xavier Institute of Management, Bhubaneswar, said, “As metro cities are overburdened, the need for improving the smaller towns cannot be overemphasised and UIDF can play a significant role.” He, however, questioned how projects built under UIDF will be operated and maintained as the revenue generation capacity of these cities is currently weak.