Fifteenth Finance Commission Grants for Rural Local Bodies

The Union Government of India has allocated financial support to Rural Local Bodies (RLBs) through the Fifteenth Finance Commission (XV FC) during the Financial Year 2024–25. This initiative aims to enhance grassroots democracy and empower local governance in states like Punjab, Uttarakhand, and Chhattisgarh. The grants are essential for the development and maintenance of rural infrastructure and services.

Overview of XV FC Grants

The XV FC Grants are designed to strengthen the financial position of Panchayati Raj Institutions (PRIs) and Rural Local Bodies. These funds are provided in two installments each financial year. The grants can be classified into Untied and Tied Grants. Untied Grants offer flexibility for local bodies to address specific needs. Tied Grants are earmarked for essential services like sanitation and drinking water.

Distribution of Grants in Punjab

In Punjab, the first installment of Untied Grants for the financial year 2024–25 amounts to Rs. 225.1707 crores. This funding supports 13,144 Gram Panchayats, 146 Block Panchayats, and 22 District Panchayats. The grants are crucial for local development projects and enhancing community services.

Distribution of Grants in Chhattisgarh

Chhattisgarh received its second installment of Untied Grants, totalling Rs. 237.1393 crores, alongside a withheld amount of Rs. 6.9714 crores from the first installment. These funds cater to 11,548 Gram Panchayats, 146 Block Panchayats, and 27 Zila Panchayats. The financial support aims to address various local needs and improve living conditions in rural areas.

Distribution of Grants in Uttarakhand

Uttarakhand has been allocated Rs. 93.9643 crores as the first installment of Untied Grants for the financial year 2024–25. This funding will benefit 7,769 Gram Panchayats, 995 Block Panchayats, and 13 Zila Panchayats. The grants will facilitate development initiatives and enhance local governance.

Utilisation of Grants

The funds from the XV FC Grants are intended for various local needs as outlined in the Eleventh Schedule of the Constitution. However, they cannot be used for salaries or establishment costs. Tied Grants specifically focus on sanitation, waste management, and drinking water supply. These allocations are vital for improving public health and environmental conditions.

Role of Government Ministries

The Ministry of Panchayati Raj and the Ministry of Jal Shakti play key roles in recommending and releasing these grants. The Ministry of Finance is responsible for the actual disbursement of funds. This collaborative effort ensures that financial resources reach the intended beneficiaries effectively.

Significance of the Grants

The XV FC Grants are for promoting decentralised governance in India. By empowering local bodies, the government aims to enhance accountability and responsiveness to community needs. The grants also support sustainable development goals at the grassroots level.

Future Implications

The ongoing financial support through the XV FC Grants is expected to have lasting impacts on rural development. It will encourage better infrastructure, improved public services, and enhanced quality of life in rural areas. The focus on local governance will also encourage citizen participation in decision-making processes.

Questions for UPSC:

1. Critically analyse the role of Panchayati Raj Institutions in promoting grassroots democracy in India.
2. What are the objectives of the Fifteenth Finance Commission? Explain its significance for rural development.
3. What is the Eleventh Schedule of the Constitution of India? How does it relate to the functioning of Rural Local Bodies?
4. Explain the concept of Untied and Tied Grants. How do they differ in terms of allocation and usage?

Answer Hints:

1. Critically analyse the role of Panchayati Raj Institutions in promoting grassroots democracy in India.

1. Panchayati Raj Institutions (PRIs) empower local self-governance, allowing communities to participate in decision-making.
2. They facilitate the decentralization of power, ensuring that governance is closer to the people.
3. PRIs enhance accountability by making local leaders responsible to their constituents.
4. They promote social inclusion by giving a platform to marginalized groups to voice their concerns.
5. PRIs play important role in the implementation of government schemes at the grassroots level, improving service delivery.

2. What are the objectives of the Fifteenth Finance Commission? Explain its significance for rural development.

1. The XV FC aims to assess the financial needs of states and local bodies for effective governance.
2. It seeks to enhance the financial position of Panchayati Raj Institutions and Rural Local Bodies.
3. The commission focuses on promoting equitable distribution of resources among states.
4. Its grants support local development projects, improving infrastructure and services in rural areas.
5. By empowering local governance, the XV FC encourages participatory development and accountability.

3. What is the Eleventh Schedule of the Constitution of India? How does it relate to the functioning of Rural Local Bodies?

1. The Eleventh Schedule lists 29 subjects for which Panchayati Raj Institutions can legislate and implement programs.
2. It includes areas like agriculture, rural development, and public health, relevant to local governance.
3. This schedule empowers RLBs to address specific local needs and priorities effectively.
4. It ensures that local bodies can operate within a constitutional framework, enhancing their legitimacy.
5. RLBs utilize funds from grants to implement projects aligned with the subjects in the Eleventh Schedule.

4. Explain the concept of Untied and Tied Grants. How do they differ in terms of allocation and usage?

1. Untied Grants provide flexibility for local bodies to address specific, location-based needs without restrictions.
2. Tied Grants are earmarked for specific purposes, such as sanitation and drinking water, with defined usage.
3. Untied Grants can be used for a variety of projects as per local priorities, enhancing community responsiveness.
4. Tied Grants ensure funds are used for essential services, promoting accountability in specific areas.
5. The distinction allows local bodies to balance immediate needs with long-term development goals.