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RAS question

Consider the following statements about the Urban Challenge Fund (UCF) approved by the Union Cabinet on February 14, 2026: 1. The Central assistance under UCF is ₹1 lakh crore, which covers 50% of the project cost. 2. Cities must raise a minimum of 50% of the project cost from market sources. 3. The scheme is operational from FY 2025–26 to FY 2030–31, extendable to 2033–34. 4. Only cities with a population above 50 lakh are eligible under UCF. Which of the above statements are CORRECT?

Correct answer: (B) 2 and 3 only.

Under the Urban Challenge Fund, cities must raise at least 50% of project financing from market sources and the fund is operational from FY 2025-26 to FY 2030-31, with implementation extendable up to FY 2033-34.

  1. (A)

    1 and 3 only

  2. (B)

    2 and 3 only

  3. (C)

    1, 2 and 4 only

  4. (D)

    2, 3 and 4 only

Explanation

Statements 2 and 3 are correct because the Union Cabinet-approved Urban Challenge Fund is built around market-led urban infrastructure financing. The PIB release says the Rs. one lakh crore Central Assistance covers 25% of project cost, not 50%, and is conditional on cities raising at least 50% of project financing from market sources such as municipal bonds, bank loans and PPPs. This structure is meant to catalyse Rs. four lakh crore of total urban-sector investment. The same release states that the fund will operate from FY 2025-26 to FY 2030-31, with an extendable implementation period up to FY 2033-34. Its coverage is also not limited to only the largest cities; in principle, all cities are covered under UCF.

Why the other options are wrong

  • (A) Option A includes statement 1, but Central Assistance under UCF covers only 25% of project cost, not 50%.
  • (C) Option C wrongly accepts statement 1 and statement 4, although the Central share is 25% and UCF coverage is not confined to cities above 50 lakh population.
  • (D) Option D wrongly includes statement 4, because the official coverage note says that, in principle, all cities will be covered under UCF.

Concept

This tests fiscal design in urban infrastructure schemes: the split between Central assistance, market finance and implementation timelines. RAS repeats such scheme questions because small percentage or eligibility changes often decide the answer in statement-based economy MCQs.

Source

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