Grant-in-aid to Rural Local Bodies

• 01 Sep 2021

On 30^th August the Department of Expenditure, Ministry of Finance has released an amount of Rs. 13,385.70 crore to 25 States for providing grants to the Rural Local Bodies. This Grant-in-aid is the 1st installment of Tied grants of the year 2021-22.

• The grants have been released as per the recommendations of the 15th Finance Commission.

Tied Grants

• Tied grants are released to the Rural Local Bodies (RLBs) for improving two critical services namely
1. Sanitation and maintenance of open-defecation free (ODF) status, and
2. Supply of drinking water, rain water harvesting and water recycling.
• Out of the total Grant-in-aid allocated for Panchayati Raj institutions, 60 percent is ‘Tied Grant’. It’s earmarked for national priorities like drinking water supply, rainwater harvesting and sanitation.
• Remaining 40 percent is ‘Untied Grant’ or Basic Grants and is 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 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.