What is Urban Infrastructure Development Fund (UIDF)?
03-02-2023
1 min read
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Overview:
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.
About Urban Infrastructure Development Fund (UIDF):
- UIDF will be established through the use of priority sector lending shortfall.
- Purpose: The fund will be used by public agencies to create urban infrastructure in tier-2 and tier-3 cities.
- It will be managed by the National Housing Bank.
- It will be established on the lines of the Rural Infrastructure Development Fund (RIDF).
- States will be encouraged to leverage resources from the grants of the 15th Finance Commission, as well as existing schemes, to adopt appropriate user charges while accessing the UIDF.
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What are tier-2 and tier-3 cities?
- Cities with a population in the range of 50,000 to 100,000 are classified as tier 2 cities, while those with a population of 20,000 to 50,000 are classified as tier 3 cities.
What is Rural Infrastructure Development Fund (RIDF)?
- The RIDF was set up by the Government in 1995-96 for financing ongoing rural Infrastructure projects.
- The Fund is maintained by the National Bank for Agriculture and Rural Development (NABARD).
- Contribution: Domestic commercial banks contribute to the Fund to the extent of their shortfall in stipulated priority sector lending to agriculture.
- Main Objective: To provide loans to State Governments and State-owned corporations to enable them to complete ongoing rural infrastructure projects.
- Repayment period: Loan to be repaid in equal annual instalments within seven years from the date of withdrawal, including a grace period of two years.
Q1) What is the mandate of National Housing Bank?
The principal mandate of the Bank is to promote housing finance institutions to improve/strengthen the credit delivery network for housing finance in the country. The Bank plays a central role in the growth of dedicated housing finance institutions and provides financial support to them.
Source: Government to provide Rs 10,000 crore/year under Urban Infrastructure Development Fund