The operationalization of the 10,000 crore rupee urban infrastructure development fund has been announced by National Housing Bank

Description

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The National Housing Bank (NHB) has announced the operationalization of the Rupees 10,000-crore Urban Infrastructure Development Fund (UIDF), which was established in this year's Budget. The fund's goal is to aid in the development of urban infrastructure in tier-2 and tier-3 cities, augmenting state government initiatives.

Objective And Scope

• The NHB-managed UIDF provides a consistent and predictable source of funding for urban infrastructure development.

• Based on 2011 census population statistics, the fund targets 459 tier-2 cities and 580 tier-3 cities.

Details Of Loan

• The fund's starting capitalization is Rupees 10,000 crore.

• The UIDF loan interest rate is fixed at the bank rate minus 1.5 percent (now 5.25 percent).

• The principle loan amount is repayable over seven years in five equal annual installments, including a two-year moratorium period.

• The loan's interest is paid quarterly.

Eligible Projects

• Sewerage and solid waste management, water supply and sanitation, and drain construction and improvement are all priority areas.

• Projects with a high impact are prioritized.

• Project proposals must be between a minimum size 5 crores (one crore for northeastern and hilly areas) and maximum size of 100 crores.

Activities Covered

• 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

• The fund cannot be utilized for maintenance or administrative/operational costs.

• The UIDF does not cover housing, power and communications, rolling stock (buses and trams), urban transportation, health and education institutions.

Obtaining Funding

• UIDF is available for both new and ongoing projects.

• Projects must be in line with the Government of India's different urban missions and projects.

• States are encouraged to harness resources from the 15th Finance Commission's grants and existing programmes.

• When accessing the UIDF, appropriate user charges should be imposed.

Allocation Of Funds

• NHB has advised States and UTs on the normative allocation for the first tranche of Rupees 10,000 crore under UIDF for 2023-24.

• Allocation is based on the percentage of eligible towns/cities' urban population in respective states/UTs.

Implementation

• The State/UT Finance Department is designated as the nodal department for fund implementation.

• NHB is putting the fund into action through its regional offices across the country.

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