India pushes blended public-private financing to create financially sustainable cities

At the World Bank-IMF Annual Meetings in Bangkok, Finance Minister Nirmala Sitharaman presented India’s plan to build financially sustainable cities by blending public investment with private capital. She emphasized that the Indian model combines state funding, enhanced municipal finances, development finance institutions and market-driven private money. Existing programmes such as AMRUT, the Smart Cities Mission and Swachh Bharat have already supported essential urban upgrades, she said.

The Urban Challenge Fund, equipped with Rs 1 lakh crore of central support, is designed to catalyse Rs 4 lakh crore of total investment through competitive challenge modes and governance reforms. Since February, the City Economic Region framework allocates Rs 5 000 crore over five years, tying regional growth to financing reforms. Sitharaman stressed that public funds will fill viability gaps and back reforms, while private investors will be drawn in by market-linked, results-based financing. The overall goal is to make Indian cities more investable, improve service delivery and ensure long-term fiscal health.