RAS question
What is the total allocation of the Urban Challenge Fund (UCF) approved by the Union Cabinet in February 2026?
Correct answer: (A) ₹1 lakh crore.
The Union Cabinet approved the Urban Challenge Fund with total central assistance of Rs. one lakh crore.
Explanation
The approved figure is Rs. one lakh crore because the Urban Challenge Fund was cleared as a central-assistance fund of that size, not as a smaller city grant. Its design explains why the headline allocation matters: central assistance can cover 25% of a project cost, while at least 50% must be raised from market sources such as municipal bonds, bank loans or public-private partnerships. That structure is why the scheme is described as market-linked and reform-driven rather than a conventional grant programme. All cities are eligible in principle, and the fund is expected to leverage Rs. four lakh crore in total urban-sector investment.
Why the other options are wrong
- (B) Rs. 50,000 crore understates the approved fund; the cited PIB release gives the Urban Challenge Fund's central assistance as Rs. one lakh crore.
- (C) Rs. two lakh crore overstates the Cabinet-approved allocation; the supported figure is Rs. one lakh crore, with higher total investment expected through market leverage.
- (D) Rs. 75,000 crore does not match the approved central-assistance amount, which PIB states as Rs. one lakh crore.
Concept
This tests governance schemes in urban development, especially how central assistance, market finance and reform-linked funding are combined. It recurs in RAS because Cabinet-approved funds and their financing design are standard current-affairs material for governance questions.