THIRUVANANTHAPURAM: Keralam is aiming to mobilise investments worth Rs 20,400 crore for urban infrastructure development under the Centre’s Urban Challenge Fund (UCF), with the state targeting up to Rs 5,100 crore in central assistance and planning to submit its first set of projects for approval within the next three to four months.
The initiative marks a shift from conventional grant-funded infrastructure creation to a model that requires urban local bodies (ULBs) to mobilise market finance and develop financially viable projects capable of generating sustainable revenue.
“The bankability requirement is one of the key features of the scheme. It will force us to prepare projects properly. A common problem is that an asset is created and its operation and maintenance are covered under the initial contract for two or three years. After that, the asset is often neglected and deteriorates,” state UCF Mission director Suraj Shaji told TNIE.
“Bankability means generating a revenue stream from the asset itself. Local bodies will have to look at private-partnership models or identify infrastructure that can generate regular, sustainable revenue before the Centre approves funding. The revenue is intended to cover maintenance. Our goal is to submit at least one or two solid projects to the central apex committee within the next three to four months,” he said.
Under the framework of the Rs 1 lakh crore UCF, central assistance is capped at 25% of the eligible project cost, while at least 50% must be mobilised through market sources, including bank loans, municipal bonds and public-private partnerships (PPPs).
Suraj said the state would prioritise PPPs and loans over municipal bonds, which require strong financial credentials and a more elaborate compliance and credit-rating process. “Municipal bonds will be difficult for us. They require an elaborate structure, including credit ratings and compliance with the prescribed criteria. It is suitable only for fiscally disciplined, high performing local bodies,” he said.
The state is exploring loans from non-banking financial companies, scheduled commercial and cooperative banks, HUDCO and institutions under NABARD. The state is considering projects to address congestion and infrastructure gaps in cities. Proposals could include widening critical road stretches, constructing parking facilities in congested areas, underground ducting to remove overhead electric poles and tangled cables, and expanding sewage networks.
The state’s town and country planning department has already prepared various plans, including master plan updates, city beautification proposals and projects aimed at decongesting core urban areas.
“Creative redevelopment of cities is something Keralam can utilise well,” said a senior official of LSGD. The UCF covers three broad verticals — cities as growth hubs, creative redevelopment of cities, and water and sanitation. These include economic and transit corridors, urban mobility, redevelopment of old city centres and markets, water supply, sewerage, and integrated solid waste management.
