The Fifteenth Finance Commission (XV FC) has initiated funding for Rural Local Bodies (RLBs) in various states, including Haryana, Tripura, and Mizoram, during the financial year 2024–25. This funding is important part of the Government of India’s strategy to enhance rural self-governance and promote sustainable development.
About the Finance Commission
The Finance Commission, established under Article 280 of the Constitution of India, is tasked with defining the financial relations between the central government and the states. It plays a very important role in determining the distribution of tax revenues and grants to local bodies, ensuring that resources are allocated effectively to meet the needs of various regions. The XV FC’s recommendations are particularly focused on strengthening the financial health of local self-governments.
Types of Grants – Untied and Tied
The grants disbursed by the XV FC are categorised into Untied and Tied grants. Untied grants provide flexibility for local bodies to address specific needs as identified by them, covering a broad range of subjects outlined in the Eleventh Schedule of the Constitution. In contrast, Tied grants are earmarked for specific services, particularly in sanitation and water supply, reflecting the government’s focus on essential public health infrastructure.
Allocation and Impact in Haryana, Tripura, and Mizoram
In Haryana, the first installment of Untied grants amounts to Rs. 194.867 crores, benefiting a wide array of Panchayati Raj Institutions (PRIs). Similarly, Tripura received Rs. 31.40 crores in Untied grants and Rs. 47.10 crores in Tied grants, while Mizoram was allocated Rs. 14.20 crores and Rs. 21.30 crores in Tied grants. This targeted funding aims to enhance the capabilities of local bodies, promoting accountability and self-reliance in rural governance.
Role of Panchayati Raj Institutions
Panchayati Raj Institutions serve as the backbone of rural governance in India, facilitating local self-governance and community participation. The XV FC’s grants aim to empower these institutions, enabling them to better serve their communities and drive local development. This aligns with the broader vision of inclusive growth as articulated by the Government of India.
Government Initiatives and Vision
The initiative is in line with Prime Minister Narendra Modi’s vision of ‘Sabka Saath, Sabka Vikas, Sabka Vishwas, Sabka Prayas’, which emphasises collective growth and participatory democracy. By providing financial resources to rural local bodies, the government seeks to encourage an environment where local communities can thrive, thereby contributing to national development.
Challenges Ahead
Despite the financial support, rural local bodies face challenges such as inadequate infrastructure, lack of technical expertise, and difficulties in fund utilisation. Addressing these issues is crucial for the effective implementation of the grants and for achieving the desired outcomes in rural development.
Questions for UPSC:
- Discuss the role and significance of the Finance Commission in India’s fiscal federalism.
- What are the differences between Untied and Tied grants provided to local bodies?
- Analyse the impact of the XV Finance Commission’s grants on rural governance in India.
- How do Panchayati Raj Institutions contribute to sustainable development in rural areas?
- Examine the challenges faced by Rural Local Bodies in utilising the grants effectively.
