Centre Proposes ₹ 30,000-Crore Modified UDAN Scheme

Why in the News

The Government of India has proposed a ₹ 30,000-crore outlay for a revamped version of the UDAN (Ude Desh Ka Aam Nagrik) regional connectivity scheme, with the aim to extend the initiative beyond April 2027 and significantly expand air access to underserved and remote regions.

Backstory / Evolution of the UDAN Scheme

1. Origin & Rationale
   • UDAN was launched in October 2016 under the National Civil Aviation Policy (NCAP) 2016 to make air travel affordable and promote regional connectivity. 
   • The first UDAN flight operated in April 2017 (Shimla-Delhi). 
2. Implementation So Far
   • As of now, over 619 (or more) RCS routes have been operationalised, connecting 88–93 unserved / underserved airports, including heliports and water aerodromes. 
   • Total passenger traffic under the scheme has crossed 1.4–1.5 crore so far. 
   • Viability Gap Funding (VGF) of more than ₹ 3,900–4,000 crore has been disbursed to airlines. 
   • The number of operational airports (including regional airstrips) has grown: from 74 in 2014 to nearly 160 as of early 2025. 
3. Challenges Identified
   • Some UDAN routes were discontinued prematurely, before completing the originally planned VGF-supported window. 
   • Limited operational viability for certain regional routes due to low demand, infrastructure constraints (like lack of navigational aids), and shortage of suitable small aircraft.
   • The VGF support period was limited (originally up to 3 years), which may not have been sufficient for airlines to stabilize on such routes.

What’s New: Key Features of the Modified UDAN Scheme

1. Expanded Funding & Time Horizon
   • A proposal for ₹ 30,000 crore to be dedicated to the revamped scheme.
   • The scheme is slated to be extended significantly, beyond its previous horizon (current scheme was to run till April 2027). 
2. Infrastructure Support (₹ 18,000 crore)
   • Capital outlay for new airport development, including greenfield airports, refurbishment of existing small airstrips, and construction of heliports in hilly/remote areas.
3. Viability Gap Funding (₹ 12,000 crore)
   • Substantial VGF to incentivize airlines to operate on low-demand regional routes, making them financially viable.
   • There is talk of extending VGF period from 3 years to 4–5 years, to give airlines more runway to become self-sustaining. 
4. Target Areas
   • 120 new destinations over the next decade. 
   • Focus on hilly / remote regions, aspirational districts, North-Eastern states, smaller towns, helipads, water aerodromes, etc. 
   • Special push for Bihar: greenfield airports will be facilitated there (in addition to expanding Patna and building a brownfield airport at Bihta). 
5. Passenger Projection
   • The government aims to benefit an additional 4 crore (40 million) passengers over the next 10 years. 
6. Regulatory / Operational Ease
   • The scheme seeks to simplify processes to encourage private sector participation (e.g., aircraft leasing, operator permits, route bidding).
   • Incentives for state governments and airport operators: reduced airport charges, priority parking, faster regulatory clearances, possibly tax reductions, etc. (though details are likely to evolve).

Need / Significance of the Modified Scheme

1. Bridging Regional Disparities
   • Many remote, hilly, and underdeveloped regions remain poorly connected. The modified UDAN aims to bring these areas into the aviation grid.
   • It will enhance accessibility in aspirational districts, which could spur economic development, tourism, and social inclusion.
2. Strengthening Aviation Infrastructure
   • By investing in greenfield airports and upgrading airstrips and heliports, the scheme will build a holistic regional aviation infrastructure, not just subsidize flights.
3. Sustaining Airlines on Less Profitable Routes
   • Longer VGF support and larger funding pool can help regional airlines survive until they achieve commercial viability.
   • This could also encourage the acquisition of appropriate aircraft (e.g., turboprops) suitable for short-haul, low-demand routes.
4. Socio-Economic Benefits
   • Improved connectivity → better access to health care (medical evacuations), faster logistics, and greater mobility for people.
   • Job creation: airport construction, airline operations, associated services (tourism, hospitality, ground transport).
   • Balanced development: by focusing on Northeast, hill states, remote districts, the modified UDAN contributes to more equitable regional growth.

Potential Risks / Challenges

• Financial sustainability: Even with VGF, maintaining long-term demand and profitability may be tough on very remote routes.
• Land & regulatory hurdles: Greenfield airport projects often face land acquisition, environmental clearances, and state-level coordination issues.
• Aircraft availability: Finding or financing suitable small aircraft (especially 20–70 seater turboprops) can be challenging.
• Competition from other transport modes: Rail (especially trains like Vande Bharat) or road connectivity might compete with short regional flights in cost or convenience. Indeed, some analysts have pointed out that rail connectivity may limit the uptake of UDAN routes. 
• Implementation capacity: Ensuring timely construction of airports, heliports, and water aerodromes requires efficient governance, robust monitoring, and multi-stakeholder cooperation.