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India’s cities face Rs 80 lakh crore infrastructure gap by 2037, report warns
India
Published on 15 May 2026
A Rs 1 lakh crore fund aims to end grants forever
India will need nearly Rs 80 lakh crore for urban infrastructure by 2037, with cities projected to contribute about 70% of GDP by 2036, according to Brickwork Ratings. The report flags a shift from grant-led support to market financing via an Urban Challenge Fund of Rs 1 lakh crore. It expects around Rs 4 lakh crore of investment in five years, requiring local bodies to fund at least 50% via municipal bonds, loans, or PPPs, while the Centre provides 25%. Credit ratings and a repayment guarantee scheme for smaller towns are central to access.
- India’s urban infrastructure need: nearly Rs 80 lakh crore by 2037
- Cities are expected to drive about 70% of GDP by 2036
- Urban Challenge Fund: Rs 1 lakh crore to shift to market-based financing
- Cities must raise at least 50% via municipal bonds bank loans or PPPs
- Only 17 cities issued municipal bonds since FY18 totaling Rs 45.4 billion
- Municipal bond yields tightened, with yield spreads dropping to ~155 bps by FY26
Read the full story at The Economic Times
This summarization was done by Beige for a story published on 
The Economic Times