Explanation:

• Grants from the Union Government to Panchayats (Rural Local Bodies (RLBs)) are based on the recommendations of the Central Finance Commission as per Article 280 of the Constitution.
• The allocation made by the Finance Commission is done in two parts, namely Basic Grant and Tied Grant in 50:50% mode.
• Basic grants are untied and can be used by RLBs for location-specific needs, except for salary or other establishment expenditure.
• The ‘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 etc.

Hence both statements are correct.