The Fifteenth Finance Commission (XV FC) in its report for 2020-21 has recommended grants for Rural Local Bodies (RLBs) in 28 States. The grants have been recommended for all tiers of the Panchayati Raj and also to the Fifth and Sixth schedule areas. The grants are provided in two parts, namely, (i) Basic (Untied) Grants and (ii) Tied Grants in the ratio of 50:50. The basic grants are untied and can be used by RLBs 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 RLBs shall, as far as possible, earmark one half of these Tied Grants each to these two critical services. However, if any RLB has fully saturated the needs of one category, it can utilize the funds for the other category. The total size of the XV FC Grants allocation recommended is Rs.60,750 crore in 2020-21. Grants to RLBs are to be released in two equal installments.
XV FC Basic (Untied) Grants and Tied Grants of Rs. 15187.50 crores each were released to the States by the Ministry of Finance on 17.6.2020 and 15.07.2020 respectively. State-wise allocations and release of the XV FC Grants is as per Annexure.