The National Housing Bank (NHB) has announced the operationalization of the ₹10,000-crore Urban Infrastructure Development Fund (UIDF), as outlined in this year’s Budget. The fund aims to facilitate the creation of urban infrastructure in tier-2 and tier-3 cities, supplementing the efforts of state governments.
Key Points:
Objective and Scope:
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- The UIDF, managed by NHB, provides a stable and predictable source of finance for urban infrastructure development.
- The fund targets 459 tier-2 cities and 580 tier-3 cities based on the 2011 census population data.
Loan Details:
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- The initial corpus of the fund is ₹10,000 crore.
- Interest rate on UIDF loans is set at bank rate minus 1.5 percent (currently 5.25 percent).
- The principal loan amount is repayable in five equal annual installments within seven years, including a two-year moratorium period.
- Interest on the loan is payable quarterly.
Eligible Projects:
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- Focus areas include basic services such as sewerage and solid waste management, water supply and sanitation, and construction and improvement of drains.
- Priority is given to impact-oriented projects.
- Project proposals must fall within a minimum size of ₹5 crores (₹1 crore for northeast and hilly states) and a maximum size of ₹100 crore.
Activities Covered:
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- Water supply network (new/augmentation/rehabilitation)
- Construction and improvement of drains/storm water drains
- Sewerage network (new/augmentation/rehabilitation)
- Sewage treatment plants – secondary/tertiary treatment
- Comprehensive projects of pay and use toilets operated and managed by the private sector
- Solid Waste Processing Plants (new/augmentation)
- Land reclamation from legacy dumpsite remediation
- Roads (excluding maintenance works) within area development projects with provisions for underground utilities
- Electric/gas crematorium
- Transit-oriented development for creating dense, mixed-use developments near public transportation
- Town planning schemes for greenfield development
- Parks with open gyms not involving major construction work
Exclusions:
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- The fund cannot be used for maintenance works or administrative/establishment expenses.
- Housing, power and telecom, rolling stock (buses and trams), urban transport, health, and education institutions are not covered by UIDF.
Accessing the Fund:
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- Both new and ongoing projects are eligible for UIDF.
- Projects must align with various urban missions and programs of the Government of India.
- States are encouraged to leverage resources from the grants of the 15th Finance Commission and existing schemes.
- Appropriate user charges should be adopted while accessing the UIDF.
Fund Allocation:
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- The normative allocation for the first tranche of ₹10,000 crore under UIDF for 2023-24 has been advised by NHB to States and UTs.
- Allocation is based on the urban population percentage in respective States/UTs in eligible towns/cities.
Implementation:
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- The Finance Department of States/UTs is designated as the nodal department for fund implementation.
- NHB is operationalizing the fund through its regional offices across the country.
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