Centre Releases ₹260.20 Crore XV Finance Commission Grants to Kerala Panchayats

The release is aimed at strengthening grassroots governance and enabling Panchayati Raj Institutions (PRIs) to effectively address local development priorities.

 

The Union Government has released ₹260.20 crore to Rural Local Bodies (RLBs) in Kerala as grants under the Fifteenth Finance Commission (XV FC) for the Financial Year 2025–26. The amount constitutes the first instalment of Untied Grants and will benefit all tiers of rural local governance in the State, including 14 District Panchayats, 152 Block Panchayats and 9,414 Gram Panchayats.

The release is aimed at strengthening grassroots governance and enabling Panchayati Raj Institutions (PRIs) to effectively address local development priorities. These funds are part of the Finance Commission’s broader mandate to empower local bodies with predictable and adequate financial resources, thereby deepening decentralisation and improving service delivery at the village level.

The Ministry of Panchayati Raj and the Ministry of Jal Shakti, through its Department of Drinking Water and Sanitation, recommend the release of XV Finance Commission grants for Rural Local Bodies and PRIs. Based on these recommendations, the Ministry of Finance releases the grants in two instalments during the course of a financial year, subject to fulfilment of stipulated conditions and performance benchmarks.

Untied Grants provide flexibility to rural local bodies to address location-specific and community-driven needs. These funds can be utilised for development works related to the 29 subjects listed in the Eleventh Schedule of the Constitution, which include areas such as agriculture, minor irrigation, rural housing, roads, health, education, social welfare and poverty alleviation. However, the grants cannot be used for payment of salaries or other establishment-related expenditures, ensuring that the funds are directed towards developmental activities and asset creation.

In addition to Untied Grants, the XV Finance Commission has also provided for Tied Grants to Panchayati Raj Institutions. These grants are earmarked for the delivery of essential civic services, particularly sanitation and drinking water. Tied Grants are to be utilised for maintaining Open Defecation Free (ODF) status, management and treatment of household solid waste, human excreta and faecal sludge, as well as for improving drinking water supply, promoting rainwater harvesting and encouraging water recycling and reuse at the local level.

The release of the first instalment of XV FC grants is expected to significantly support Kerala’s rural local bodies in planning and executing development projects in a timely manner. It will also help strengthen sanitation infrastructure, ensure safe drinking water supply and improve overall quality of life in rural areas, in alignment with national priorities such as Swachh Bharat Mission and Jal Jeevan Mission.

By ensuring steady flow of funds to the grassroots, the Union Government aims to enhance transparency, accountability and efficiency in local governance, while enabling Panchayats to play a more proactive role in achieving inclusive and sustainable rural development.