Learning from how private real estate developers successfully create self-sufficient, high-quality projects with robust internal infrastructure even when civic amenities outside remain neglected, the government is set to involve them more directly in urban development.

Under the forthcoming Urban Challenge Fund (UCF) — a ₹1 lakh crore scheme aimed at promoting sustainable and inclusive city growth — private developers will be allowed to act as “urban infrastructure administrators” in major redevelopment zones. They will take charge of developing and maintaining key civic facilities such as roads, water supply, sanitation, and transport networks, aligning private efficiency with public goals.

The housing and urban affairs ministry has also told the Public Investment Board (PIB), an inter-ministerial panel for appraisal of fully govt-funded schemes, that private developers would be allowed to bring bankable urban infrastructure projects to get financial support under the UCF scheme.

These projects must be endorsed by state govts or urban local bodies (ULBs) and the central assistance will be routed through state-level escrow accounts.

The UCF was announced in the budget. Under this scheme, while the Centre will provide 25% financial support for bankable bankable projects, 50% will come from bonds, bank loans, and public private partnerships. The remaining 25% will be funded by states and ULBs.