New Delhi: Finance Minister Nirmala Sitharaman on Friday called for a mix of public investment, stronger municipal finances, development finance and private capital to build financially sustainable, investable cities in India.

There is a need to focus on developing cities that are financially sustainable and capable of attracting investments, she said during her keynote address on India's ambitious Urban Development Programmes on the sidelines of the World Bank-IMF Annual Meetings in Bangkok, Thailand.

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"The Indian approach combines public investment, stronger municipal finances, development finance and private capital," Sitharaman said while speaking on the theme of 'Working Together to Make Cities Investable - Mobilising Private Capital for Urban and Water Infrastructure'.

She stressed that bringing these sources of funding together would be key to building cities that are both investable and financially sustainable.

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Cities must develop a pipeline of bankable projects supported by technically sound designs, realistic demand assessments, life-cycle cost estimates and credible procurement and implementation arrangements, she said.

Sharing details of various initiatives taken by the government, Sitharaman said India has established a substantial public investment framework through national programmes implemented in partnership with state governments, which are provincial governments, and urban local bodies.

The AMRUT scheme, Smart Cities Mission, Swachh Bharat Mission, both urban and rural, and so on, she said.

Several such schemes planned in the last 8-9 years have supported the expansion and modernisation of essential urban services, he said, adding that the Urban Challenge Fund has Rs 1 lakh crore in central assistance and aims to catalyse Rs 4 lakh crore in total urban investment.

Cities compete for assistance through challenge mode, supported by project appraisals and commitments to reforms in governance, planning and also municipal finance, the minister said.

"The City Economic Region approach, which we have taken up from February 1 this year, when the Budget was submitted for the year 2026-27, connects reforms to regional growth," she added.

Budget 2026-27 proposed Rs 5,000 crore per City Economic Region over five years through challenge mode and reform-cum-results-based financing.

The government has been pushing for reforms in urban planning and financing to make Indian cities more investable and financially sustainable, with a focus on mobilising private capital alongside public investment.

Regional planning can improve land-use efficiency, reduce duplication of infrastructure and services, and ensure clear accountability for ownership, payments and maintenance, she said.

While public investment remains crucial for providing basic services and ensuring inclusion, she said market-linked and reform-driven investments can help attract additional funding and improve project delivery.

The approach envisages using public funds to bridge viability gaps, support reforms and mobilise additional capital rather than replace government funding, she noted.

The Urban Challenge Fund launched by the government provides support for project preparation and capacity building at the national, state and city levels.

Its Rs 5,000 crore credit repayment guarantee sub-scheme is aimed at supporting eligible urban local bodies with populations below one lakh, helping them access finance for urban development projects.