Urban Infrastructure Development Fund (UIDF)

Why in news?

The government has established the Urban Infrastructure Development Fund (UIDF) to address urban infrastructure needs in Tier-2 and Tier-3 cities. The initiative was announced by the Minister of State for Housing and Urban Affairs in the Lok Sabha, using the priority sector lending shortfall to create better urban infrastructure.

• Purpose and Scope:
• The UIDF aims to support public agencies in developing urban infrastructure in smaller cities, focusing on areas like sewerage, solid waste management, water supply, sanitation, and the construction/improvement of drains.
• It is designed to supplement the efforts of State Governments, UTs, and Urban Local Bodies.
• The Fund targets 459 Tier-2 cities and 580 Tier-3 cities.
• Management:
• The Fund is managed by the National Housing Bank (NHB).
• Corpus and Funding:
• The initial corpus for the Fund is set at ₹10,000 crore.
• It is established on the lines of the Rural Infrastructure Development Fund (RIDF).
• Loan Details:
• Loans are provided at an interest rate of Bank Rate minus 1.5%.
• Repayment is spread over five equal annual installments within seven years (with a two-year moratorium).
• Interest payments are due quarterly.
• Incentives:
• States are encouraged to leverage resources from the 15th Finance Commission grants and existing schemes while implementing infrastructure projects.
• The Fund also encourages adopting appropriate user charges to ensure sustainability of projects.

The UIDF seeks to provide a stable and predictable source of financing to improve essential services and infrastructure in smaller cities, promoting balanced urban growth across India.