| This could be a centrally-sponsored scheme with 75 per cent of the funds earmarked for towns with a population of less than 1 million, and 25 per cent for cities with more than a population of 1 million, also called million-plus cities. |
| "Such an allocation would ensure focussed attention for providing amenities in small and medium towns and at the same time, making all cities eligible," said an official. |
| Financial institutions and capital markets could be tapped for financing urban infrastructure, at least for individual sectors like water supply and those where user charges and the general resource position is such that debt funds could be used to supplement grants or own resources. |
| Up to 10 per cent of the funds required would have to be raised from financial institutions or own resources, in case of smaller cities, while in case of million plus cities, this figure would be as high as 50 per cent, said officials adding that this was important in order to build the creditworthiness of urban local bodies. |
| Allocations made currently under the City Challenge Fund, Urban Reform Incentive Fund, the Mega City programme, Integrated Development of Small and Medium Towns and the Pooled Finance Development Fund are proposed to be merged under the mega-scheme. |
| It is also proposed that grants from the centre and state governments be put into a special revolving fund at the state level, with a stipulation that at least a quarter of such grants should be ploughed back into the fund. |
| The appraisal, expected to be finalised by January, is likely to suggest that the Centre allocate funds under the new scheme conditional on states adopting a reform agenda. For this, the states would have to sign memoranda of agreement with the Ministry of Urban Development. |
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