Department of Expenditure releases Rs 12,351 crore to 18 States for grants to rural local bodies

The Department of Expenditure in the Ministry of Finance has released an amount of Rs.12,351.5 crore to 18 States to provide grants to the Rural Local Bodies (RLBs).

This amount is the second instalment of basic grants released in the financial year 2020-21, the Department said in a statement.

The grant has been released to 18 States that have provided the Utilisation Certificate for the first instalment on the recommendation of the Ministry of Panchayati Raj.

The grants to RLBs are released in line with 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 the Panchayati Raj - Village, Block and District - to enable pooling of resources across villages and blocks, it said.

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

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

Thus, 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.

Types of grants

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 -- sanitation and maintenance of Open Defecation Free status -- and supply of drinking water, rain water harvesting and water recycling.

The grants are meant to ensure additional funds to RLBs over and above the funds allocated by the Centre and the State for sanitation and drinking water under the Centrally Sponsored Schemes like Swachh Bharat and Jal Jeevan Mission.

The States are required to transfer the grants to the RLBs within 10 working days of receipt from the government. Any delay beyond 10 working days requires the State governments to release the grants with interest, it added.