Chief Minister Devendra Fadnavis on Monday strongly recommended the creation of an 'Urban Challenge Fund' to position cities as engines of growth and systematically eliminate roadblocks hindering their progress. Expressing strong confidence in the initiative, the Chief Minister stated that this innovative campaign will lead to significant improvements in civic infrastructure and service delivery across urban areas.
The implementation framework for the Urban Challenge Fund campaign was discussed in detail during an Urban Development Department review meeting he chaired. The financial structure of the Urban Challenge Fund was also discussed during the meeting.
It has proposed an overall project fund of Rs 90,000 crore. Out of this, a target mobilising framework of Rs 44,800 crore has been mapped out for Maharashtra, comprising Rs 11,200 crore from the Central Government, Rs 11,200 crore from the State Government, and Rs 22,400 crore sourced through market-based mechanisms to kickstart these transformative urban projects.
Highlighting the state's proactive measures in raising capital for local bodies, Fadnavis noted that Maharashtra has already taken successful steps in this direction. Previously, the Nashik and Pune Municipal Corporations successfully raised dedicated funds for water supply and sanitation projects.
These fund-raising initiatives have also received approval from the National Executive Committee (NEC). Additionally, similar funding mechanisms will soon be extended to support projects under the Pimpri-Chinchwad and Nagpur Municipal Corporations, he added.
The meeting highlighted that while central and state government subsidy-based urban schemes exist, institutional, financial, and administrative constraints often delay infrastructure projects. The Urban Challenge Fund will play a crucial role in overcoming these bottlenecks by enabling cities to raise capital through municipal bonds and Public-Private Partnerships (PPP).
The campaign will encompass approximately 22 key focus areas. These include digital governance and core civic infrastructure development, circular economy initiatives, de-congestion and traffic management projects, last-mile connectivity, revitalisation of urban zones spanning 5 to 20 sq km, developing small and medium towns as growth centres, marketplace redevelopment, pedestrian and bicycle-friendly transport projects, demonstration/pilot projects, upgradation of transit hubs and Transit-Oriented Development (TOD) infrastructure, and creative urban renewal, water supply, and sanitation projects, said the government release.
The Chief Minister's pitch for the creation of an 'Urban Challenge Fund' comes days after the Sixth Maharashtra Finance Commission (FC), chaired by Nitin Kareer, was tabled in the Maharashtra Legislature on Friday, which has an annual devolution of 27.3 per cent of the State's Own Tax Revenue (SOTR) to local bodies, marking a strategic shift towards financial decentralisation and structural reform.
The existing 26.3 per cent devolution rate will be increased by an additional 1.0 per cent of SOTR. This combined fund will be split 55 per cent to Urban Local Bodies and 45 per cent to Rural Local Bodies. Within these allocations, 5 per cent will be strictly reserved as performance grants, and another 5 per cent will be allocated to Rural-Urban transition management.