15th Finance Commission period set a record with 94.98% funds release for rural bodies, Pg12

Key Highlights:

• The 15th Finance Commission (2020-2026) achieved a record 94.98% release of funds for Rural Local Bodies (RLBs).
• The 15th Finance Commission recommended a total grant of Rs 2,97,555 crore for RLBs.
• Five states, including Assam, Kerala, Mizoram, Tripura, and Uttar Pradesh, received 100% of their allocated RLB grants.
• The 16th Finance Commission (2026-2031) has recommended Rs 4.35 lakh crore in grants for RLBs.

Detailed Insights:

• The increased funding reflects a commitment to cooperative federalism and decentralized governance, strengthening Panchayati Raj Institutions under Article 243G of the Constitution.
• The 16th Finance Commission's recommended Rs 4.35 lakh crore grant includes Rs 3.48 lakh crore as basic grant, and Rs 43,524 crore each for rural local body performance grant and state performance grant.
• Grant distribution among states will be based on projected rural population for 2026 and the total area of each state, with most of the grant allocated to Gram Panchayats.
• The Finance Commission began awarding grants to RLBs with the 10th Finance Commission (1995-2000); grant release rates were 91% during the 14th Finance Commission and 90.5% during the 13th Finance Commission.

Key Concepts Involved:

• Finance Commission: A constitutional body that determines the distribution of tax revenues between the Union and the States.
• Rural Local Bodies (RLBs): Local self-governing bodies in rural areas, including Gram Panchayats, Block Panchayats, and District Panchayats.
• Cooperative Federalism: A system where the Union and States cooperate and coordinate in the governance process.