India, Feb. 14 -- The Union Cabinet has approved the launch of a 1 lakh crore Urban Challenge Fund (UCF) to drive market-led urban transformation, Union Minister Ashwini Vaishnaw said on Saturday.

The government said the initiative is expected to catalyse a total investment of 4 lakh crore in the urban sector over the next five years. Under the scheme, central assistance will cover 25 per cent of a project's cost, subject to at least 50 per cent of funding being mobilised from the market.

Describing the move as a paradigm shift, the government said the UCF transitions India's urban development approach from grant-based financing to a market-linked, reform-driven and outcome-oriented infrastructure model.

The fund will leverage market ...