Centre Releases Grant Of Rs 12,351 Crore To 18 States To Improve Financial Viability Of Rural Local Bodies

The Ministry of Finance has released an amount of Rs 12,351.5 crore to 18 States for providing grants to the Rural Local Bodies (RLBs). This amount is the second instalment of basic grants released in the financial year 2020-21.

The grant has been released to 18 States who have provided the Utilisation Certificate for the first instalment and on the recommendation of the Ministry of Panchayati Raj, a Finance Ministry statement said on Wednesday (27 January).

The grants to RLBs are released as per the recommendations of the 15th Finance Commission to create community assets and improve financial viability of the RLBs. The grants are provided to all the three tiers of Panchayati Raj - Village, Block and District to enable pooling of resources across villages and blocks.

The 15th Finance Commission has recommended two types of grants to the RLBs – basic and tied grants. Basic grants are untied and can be used by the local bodies for location specific felt needs except for salary or other establishment expenditure. The tied grants can be used for the basic services of (a) sanitation and maintenance of Open Defecation Free (ODF) status and (b) supply of drinking water, rain water harvesting and water recycling, the ministry said.

The States are required to transfer the grants to the RLBs within 10 working days of receipt from the Union Government. Any delay beyond 10 working days requires the State Governments to release the grants with interest.

Earlier in June 2020, the first instalment of basic grants to RLBs and arrears of 14th Finance Commission amounting to Rs 18,199 crore were released to all the States.

Subsequently, the first instalment of tied grants amounting to Rs 15,187.50 crore was also released to all the States.

A total amount of Rs 45,738 crore of both basic and tied grants has been released so far by the Department of Expenditure to the States for RLBs, the ministry said.