India, Feb. 14 -- The Rs.1 lakh crore Urban Challenge Fund (UCF) that the Union Cabinet approved on Friday is designed to tackle the day-to-day challenges from rapid urbanisation, said information and broadcasting minister Ashwini Vaishnaw on Saturday.

Vaishnav said the UCF will focus on creative redevelopment of cities, positioning them as growth hubs, and strengthening water and sanitation systems to drive transformative, market-linked urban infrastructure. He added that the centrally sponsored scheme will provide Rs.1 lakh crore in central assistance between FY 2025-26 and FY 2030-31, extendable by three years.

The Centre's contribution will be capped at 25% of the project cost, with at least 50% mobilised from market sources, such a...