Hyderabad: Telangana has emerged as one of the first six states to secure Central funding for urban infrastructure initiatives under the Urban Challenge Fund (UCF), sources said on Wednesday. The Union Ministry of Urban Affairs has approved six major projects across 26 urban local bodies in the state with a total outlay of Rs 5,681.04 crore, including Central assistance of Rs 1,420.26 crore. This is out of projects worth nearly Rs 15,000 crore cleared under the Rs 1.5 lakh crore UCF.
The approved projects include the establishment of an AI-based Integrated Command and Control Centre (ICCC) at Khammam for the Khammam-Karimnagar-Warangal urban corridor covering 27 urban bodies, laying of an underground sewerage network in Warangal, remediation of a dumpsite, development of stormwater drainage systems and non-motorised transport infrastructure. Officials stated that all the approved projects are designed to be self-sustainable.
The Centre has approved projects worth nearly Rs 15,000 crore across six states as part of the initial phase of the Rs 1 lakh crore Urban Challenge Fund announced in the Union Budget for 2025-26. Telangana, Andhra Pradesh, Karnataka, Maharashtra, Meghalaya and Odisha are the first states to propose urban reform initiatives aimed at transforming cities under the new scheme.
As per the funding pattern, the Centre will bear 25 per cent of the project cost, the state government another 25 per cent, while the remaining 50 per cent will be mobilised through municipal bonds, bank loans and public-private partnerships.
Official sources said that the six states in the first tranche of approved projects have already secured bank loans to finance 50 per cent of the project costs. An official communication sent by the Centre to the Municipal Administration and Urban Development department stated that the Rs 4,674.6 crore underground sewerage network project in Warangal has been cleared with Central assistance of Rs 1,168.65 crore and a loan component of Rs 2,337.30 crore from German development bank KfW.
Another major project with an outlay of Rs 840 crore will be implemented in Karimnagar. The project includes solid waste management, riverfront development, stormwater drains, roads and junction improvements, footpaths and construction of a skywalk. The Centre will contribute Rs 210 crore towards the project, while the remaining 50 per cent will be funded through a HUDCO loan.
The AI-based ICCC project in Khammam has been approved at a cost of Rs 166.44 crore. The proposed centre will provide digital governance support to municipal bodies in the Khammam-Warangal-Karimnagar cluster. The project includes a Central grant of Rs 41.61 crore and a HUDCO loan of Rs 83.22 crore.
Under the provisions of the Urban Challenge Fund, cities are encouraged to leverage market-linked financing for projects that demonstrate economic impact, scalability, sustainability and strong reform linkages. The Centre will release its 25 per cent grant share after states secure 50 per cent of the required bank funding, while the remaining contribution will come from the state government or urban local bodies.
Official sources said Chief Minister A. Revanth Reddy is keen on developing the Warangal corridor into a major urban growth hub. Besides the sewerage network in Warangal, around 60 kilometres of model roads will be developed in Karimnagar, along with integrated waste management systems to prevent leachate leakage into the Manair River.
Sources said that Revanth Reddy has already cleared 23 additional municipal projects worth Rs 14,000 crore under the Urban Challenge Fund covering drinking water supply, waste-to-energy and several other sectors, and these proposals are presently under the Centre’s appraisal.
Overall, the first meeting of the National Apex Committee approved 17 projects across the country with a combined outlay of Rs 14,867.88 crore, including Central assistance of Rs 3,717.48 crore. The projects cover cities including Nashik and Pune in Maharashtra, Visakhapatnam and Mangalagiri in Andhra Pradesh, Sambalpur, Berhampur and Rourkela in Odisha, New Shillong Township in Meghalaya, and Bengaluru in Karnataka.
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