Budget 2025 highlights: FM unveils ₹1 lakh crore Urban Challenge Fund

Finance Minister Nirmala Sitharaman, presenting her eighth consecutive Union Budget for 2025-26, laid out a roadmap for "transformative reforms" aimed at bolstering India's growth trajectory. The Budget prioritises six key sectors, including taxation, financial services, power, urban development, mining, and regulatory frameworks, underscoring the government's long-term vision to enhance global competitiveness.

In the Budget, the FM announced the ₹1 lakh crore Urban Challenge Fund, designed to accelerate urban redevelopment and strengthen critical infrastructure. The initiative, first outlined in the July Budget, seeks to convert cities into economic growth hubs by improving water and sanitation systems, supporting creative redevelopment, and fostering innovation. The fund will finance up to 25% of bankable projects, with the remainder sourced through bonds, bank loans, or public-private partnerships (PPPs). For the fiscal year 2025-26, the government has allocated ₹10,000 crore as an initial push to catalyse urban transformation.

“This will fuel the ongoing momentum in rebuilding urban infrastructure and drive greater demand for real estate in the urban and semi-urban areas,” said Vimal Nadar, head of Research at Colliers India.

“This Budget aims to initiate transformative reforms across six domains over the next five years, which will boost our growth potential and global competitiveness,” Sitharaman said, emphasising the government's commitment to long-term economic resilience. She highlighted agriculture as the “first engine for growth,” signalling a renewed focus on rural prosperity and productivity enhancement.

According to Sitharaman, the Budget aligns with the broader vision of ‘Viksit Bharat’—a developed India free from poverty, with access to quality education, affordable healthcare, and essential services. Sitharaman stressed that inclusive growth remains a top priority, ensuring that marginalised sections, including the poor, youth, farmers, and women, benefit from the proposed reforms.

With a focus on long-term structural changes, the Budget outlines 10 broad development areas, reinforcing the government’s commitment to sustainable economic expansion. From increasing agricultural productivity to enhancing financial services and improving regulatory efficiency, the proposed measures are designed to drive investment, innovation, and employment generation.