LONG-TERM FINANCING Annual outlay of ₹10,000 cr for urban infrastructure
Financial Express Mumbai|February 17, 2023
Funds to be earmarked from priority-sector lending shortfall
PRASANTA SAHU
LONG-TERM FINANCING Annual outlay of ₹10,000 cr for urban infrastructure

TO BRIDGE THE wide funding gap for the creation of urban infrastructure, the Centre will allocate 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.

"Annual contribution to the Urban Infrastructure Development Fund (UIDF) from priority sector lending shortfall can also be enhanced going forward, depending on funds availability," a senior official said. 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, finance minister Nirmala Sitharaman said 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).

The Centre set up the RIDF in 1995-96 under Nabard to extend financing support to states for rural infrastructure projects in the irrigation sector at that time. Subsequently, RIDF was made available for new rural infrastructure projects and its ambit was broad-based to cover almost all-important aspects of rural infrastructure. With the allocation of 40,001 crore for 2022-23 under RIDF, the cumulative allocation has reached 4.6 trillion.

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