Centre Releases ₹730 Crore to Boost Rural Local Bodies

In a move to empower grassroots governance, the Union Government has released over ₹730 crore to strengthen Rural Local Bodies (RLBs) in Gujarat and Haryana. The allocation, made under the 15th Finance Commission (XV-FC) for the Financial Year 2025–26, reflects the Centre’s commitment to decentralised development and better service delivery in rural areas.

What Are XV-FC Grants?

• The 15th Finance Commission, active for the period 2021–26, recommended significant transfers to local governments to boost their financial autonomy. Among these, grants to RLBs are released under two categories:
• Untied Grants: These can be used for any local priority under the 29 subjects listed in the Eleventh Schedule of the Constitution—ranging from sanitation to minor irrigation—except for salary and administrative expenses.
• Tied Grants: These are earmarked for specific essential services like drinking water supply, sanitation, waste management, rainwater harvesting, and fecal sludge treatment.

Each financial year, grants are released in two installments based on recommendations by the Ministry of Panchayati Raj and the Ministry of Jal Shakti, and are disbursed by the Ministry of Finance.

Fund Allocation Details

Gujarat

Gujarat received the second installment of Untied Grants for FY 2024–25, totaling ₹522.20 crore. This amount was distributed across,

• 38 District Panchayats
• 247 eligible Block Panchayats
• 14,547 eligible Gram Panchayats

In addition, ₹13.59 crore from a previously withheld first installment has now been released to newly eligible local bodies: 6 District Panchayats, 5 Block Panchayats, and 78 Gram Panchayats.

Haryana

Haryana received the first installment of Untied Grants for FY 2025–26, totaling ₹195.13 crore, covering,

• 18 District Panchayats
• 134 Block Panchayats
• 6,164 Gram Panchayats

Significance of These Grants

• This fund release is more than just a financial transaction—it represents a vital policy tool to improve rural governance, foster local decision-making, and support basic infrastructure and services.
• By allowing flexibility through untied funds, Panchayats can address the unique needs of their regions. Tied grants ensure focus on critical services that directly impact public health and the rural quality of life.