Context: Recently, the Ministry of Finance has released a part of grants-in-aid of Rs. 15187.50 crore for around 2.63 lakh Rural Local Bodies (RLBs) of 28 States.

• This has been made on the recommendations of the Ministry of Panchayati Raj and the Department of Drinking Water and Sanitation, Ministry of Jal Shakti.
• This forms part of the Tied Grant as recommended by the 15th Finance Commission (FC) for the Financial Year (FY) 2020-2021.

Key Points

• Recommendation of 15th FC: It recommended the grant in aid of Rs. 60,750 crore for (FY 2020-21) the RLBs which is the highest ever allocation made by the Finance Commission in any single year.
• Allocation: It will be allocated in two parts, namely Basic Grant and Tied Grant in 50:50% mode.
• Basic Grant: These grants are untied and can be used by RLBs for location-specific needs, except for salary or other establishment expenditure
• Untied funds are utilised for the works of emergent nature which are normally not covered under the schemes decentralized at the district level.

Tied Grants: These are used for the basic services of:

• Sanitation and maintenance of Open-Defecation Free (ODF) status.
• Supply of drinking water, rain water harvesting and water recycling.
• The RLBs shall, as far as possible, earmark one half of these grants each to these two critical services.

However, if any RLB has fully saturated the needs of one category it can utilize the funds for the other category.

• Distribution: The State Governments will be distributing the grants to all the tiers of of the Panchayati Raj -village, block and district including the traditional bodies of 5th and 6th Schedule areas based on the accepted recommendations of the latest State Finance Commission (SFC) and in conformity with the recommendations of the 15th FC.
• Assistance: The Ministry of Panchayati Raj would support the states in effective utilization of the grants by providing Web/IT enabled platforms for planning, monitoring, accounting / auditing of the works and funds flow at the level of each of the RLBs.

Significance

• Fighting Covid 19: It would help RLBs in providing employment. E.g. migrant laborers who have returned to their native places owing to Covid-19 pandemic situation.
• Delivery of Basic Services: Availability of this fund will boost RLBs effectiveness in delivery of basic services to the rural citizens.
• Rural Infrastructure: It will augment the rural infrastructure in a constructive way e.g construction of roads, supply of water etc.