Tatsat Chronicle Magazine

Over Rs.13,000 crores Grant-in-aid released to rural local bodies

September 3, 2021

The Department of Expenditure, Ministry of Finance released Rs. 13,385.70 crore to 25 states for providing grants to the rural local bodies. This Grant-in-aid is the first instalment of tied grants of the year 2021-22. The grants have been released as per the recommendations of the 15th Finance Commission. The top three states receiving the highest grant are Uttar Pradesh, Maharashtra and Bihar. UP received Rs. 2162.4 crores, Maharashtra Rs. 1292.1 crores while Bihar received Rs. 1112.7 crores.   

Tied grants are released to the rural local bodies (RLBs) for improving two critical services namely – sanitation and maintenance of open-defecation free (ODF) status and supply of drinking water, rainwater harvesting, and water recycling. Out of the total Grant-in-aid allocated for panchayat raj institutions, 60 per cent is the ‘Tied Grant’.  It’s earmarked for national priorities like drinking water supply, rainwater harvesting, and sanitation. The remaining 40 percent is ‘Untied Grant’ to be utilized at the discretion of the Panchayati Raj institutions for location-specific felt needs, except for payment of salaries.

Tied grants are meant to ensure the availability of additional funds to the Rural local bodies over and above the funds allocated by the Centre and the State for sanitation and drinking water under the Centrally Sponsored Schemes. The states are required to transfer the grants to the Rural local bodies within 10 working days of their receipt from the union government.  Any delay beyond 10 working days requires the state governments to release the grants with interest.

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