Context:
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.
Relevance:
GS III: Indian Economy
Dimensions of the Article:
- Urban Infrastructure Development Fund (UIDF)
- Rural Infrastructure Development Fund (RIDF)
Urban Infrastructure Development Fund (UIDF)
- The UIDF will be created using priority sector lending shortfall and will be managed by the National Housing Bank.
- The fund will provide resources for public agencies to create urban infrastructure in tier-2 and tier-3 cities.
- The UIDF will be established on the lines of the Rural Infrastructure Development Fund (RIDF).
- States will be encouraged to access the UIDF by leveraging resources from the 15th Finance Commission grants and other existing schemes.
Classification of Cities:
- Tier-2 cities: Cities with a population between 50,000 to 100,000
- Tier-3 cities: Cities with a population between 20,000 to 50,000
Rural Infrastructure Development Fund (RIDF)
- The RIDF was established by the government in 1995-96 for financing ongoing rural infrastructure projects.
- The Fund is managed by the National Bank for Agriculture and Rural Development (NABARD).
- Domestic commercial banks contribute to the Fund to fulfill their shortfall in priority sector lending to agriculture.
- The main objective of the RIDF is to provide loans to state governments and state-owned corporations for completing ongoing rural infrastructure projects.
- The loan must be repaid in equal annual installments within seven years from the date of withdrawal, with a grace period of two years.
-Source: The Hindu
