Solution

To bridge the wide funding gap for the creation of urban infrastructure, the Centre will allocate Rs 10,000 crore annually from the corpus of the priority sector lending shortfall of banks to accelerate urban capital expenditure. The idea is to create a long-term dedicated fund flow mechanism for the sector. The funds would be used by public agencies to build urban infrastructure in Tier 2 and Tier 3 cities (state capitals and smaller towns). In the Budget for 2023-24, Urban Infrastructure Development Fund (UIDF) under the National Housing Bank will be established through the use of priority sector lending shortfall, like the Rural Infrastructure Development Fund (RIDF) under the National Bank for Agriculture and Rural Development (Nabard).