Industry Odisha Bureau, Jul 10: In a bid to establish a transparent roadmap san any bureaucratic delays as well as strengthen grassroots democracy, improve service delivery and empower Panchayati Raj Institutions (PRIs) to contribute to the vision of a developed and self-reliant rural India, the Ministry of Finance under Government of India has reportedly issued operational guidelines for effectively implementing the Sixteenth Finance Commission’s Rs 4.35 trillion grants to Rural Local Bodies (RLBs) for 2026–31.
The Government of India has reportedly “adopted a population-driven formula for distributing the grants for the RLBs among the states, that means, rural population carries the highest weightage.”
As per media reports, “The operational guidelines would apply to 2.62 lakh Panchayati Raj Institutions (PRIs) across the country, and the respective PRIs would ensure that rural development, healthcare and infrastructure projects address in letter and spirit the genuine needs of the local populace”.
Detailing on the structure of the grants, it has reportedly been explained that, “Out of the total allocation of Rs 4.35 trillion grants to Rural Local Bodies (RLBs) for 2026–31, 80% i.e. Rs 3.48 trillion would be ‘Basic Grants’, while the balance amount of 20% i.e. Rs 87,048 crore would be ‘Performance Grants’. While the ‘Basic Grants’ would be released throughout the period of 2026-31 to aid the PRIs meet essential service delivery needs and support routine local governance functions, the ‘Performance Grants’ would encourage better financial management and improved service delivery.”
Pertinent to note that, “The grants received by the PRIs/RLBs have to be utilized for agriculture, rural housing, roads, education, health and social welfare, etc. that are among the 29 subjects listed in the Eleventh Schedule of the Constitution of India”.
It has further been reported that, “The ‘Basic Grants’ has been split into ‘Tied’ and ‘Untied’ Grants. While the ‘Tied Grants’ must be spent on sanitation, solid waste management and water management in the respective Panchayats, the ‘Untied’ Grants’ would be allocated to the Panchayats for spending on local development needs.”
