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Urban Infrastructure Development Fund (UIDF)


Finance Minister recently announced that government will set up an Urban Infrastructure Development Fund (UIDF) of Rs 10,000 crore per year for creating infrastructure in Tier-2 and Tier-3 cities.


GS III: Indian Economy

Dimensions of the Article:

  1. Urban Infrastructure Development Fund (UIDF)
  2. Rural Infrastructure Development Fund (RIDF)

Urban Infrastructure Development Fund (UIDF)

  • The UIDF will be created using priority sector lending shortfall and will be managed by the National Housing Bank.
  • The fund will provide resources for public agencies to create urban infrastructure in tier-2 and tier-3 cities.
  • The UIDF will be established on the lines of the Rural Infrastructure Development Fund (RIDF).
  • States will be encouraged to access the UIDF by leveraging resources from the 15th Finance Commission grants and other existing schemes.
Classification of Cities:
  • Tier-2 cities: Cities with a population between 50,000 to 100,000
  • Tier-3 cities: Cities with a population between 20,000 to 50,000

Rural Infrastructure Development Fund (RIDF)

  • The RIDF was established by the government in 1995-96 for financing ongoing rural infrastructure projects.
  • The Fund is managed by the National Bank for Agriculture and Rural Development (NABARD).
  • Domestic commercial banks contribute to the Fund to fulfill their shortfall in priority sector lending to agriculture.
  • The main objective of the RIDF is to provide loans to state governments and state-owned corporations for completing ongoing rural infrastructure projects.
  • The loan must be repaid in equal annual installments within seven years from the date of withdrawal, with a grace period of two years.

-Source: The Hindu

December 2023