Union Releases ₹1,133 Crore XV Finance Commission Grants to Strengthen Rural Local Bodies

The release ensures that even newly eligible local bodies are brought within the grant coverage framework.

The Union Government has released over ₹1,133 crore as Fifteenth Finance Commission (XV FC) grants during FY 2025–26 to further empower Panchayati Raj Institutions (PRIs) and Rural Local Bodies (RLBs) in Madhya Pradesh, Punjab and Telangana.

These grants are aimed at strengthening grassroots governance, improving local infrastructure, and enabling Panchayats to address location-specific development priorities across rural India.

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Major Boost for Panchayats in Madhya Pradesh

For Madhya Pradesh, the Government has released:

• ₹65,255 lakhs (₹652.55 crore) as the second instalment of Untied Grants for FY 2024–25

This funding will benefit:

• 52 eligible District Panchayats

• 312 eligible Block Panchayats

• 23,001 eligible Gram Panchayats

Additionally, the Government has released:

• ₹77 lakhs, representing the withheld portion of the first instalment of Untied Grants for FY 2024–25

This amount will support:

• 3 additionally eligible Block Panchayats

• 6 additionally eligible Gram Panchayats

The release ensures that even newly eligible local bodies are brought within the grant coverage framework.

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Punjab Receives ₹222 Crore for Rural Development

For Punjab, the Union Government has released:

• ₹22,200 lakhs (₹222 crore) as the first instalment of Untied Grants for FY 2025–26

This grant will benefit Panchayats across the State, including:

• 13,262 eligible Gram Panchayats

• 150 eligible Block Panchayats

• 22 eligible District Panchayats

The funding is expected to accelerate local development initiatives and strengthen service delivery mechanisms in rural areas.

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Telangana Gets ₹256 Crore to Empower Gram Panchayats

For Telangana, the Government has released:

• ₹25,602.95 lakhs (₹256.03 crore) as the first instalment of Untied Grants for FY 2024–25

This will directly benefit:

• 12,702 eligible Gram Panchayats

Further, an additional amount of:

• ₹233.18 lakhs, being the withheld portion of the second instalment of Untied Grants for FY 2023–24

has been released to:

• 11 additionally eligible Gram Panchayats

• 40 Block Panchayats

This ensures comprehensive inclusion and timely support for rural governance institutions.

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How XV Finance Commission Grants Are Released

The Government of India, through the:

• Ministry of Panchayati Raj, and

• Ministry of Jal Shakti (Department of Drinking Water and Sanitation)

recommends the release of XV-FC grants to States for Rural Local Bodies.

The grants are then released by the Ministry of Finance in two instalments every financial year.

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Untied Grants: Flexible Funds for Local Priorities

The Untied Grants provide Panchayats with flexibility to address location-specific felt needs under the 29 subjects listed in the Eleventh Schedule of the Constitution.

These funds can be used for development priorities but cannot be spent on salaries or establishment costs.

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Tied Grants: Focus on Water and Sanitation

The Tied Grants are earmarked for improving essential rural services, particularly:

1. Sanitation and ODF Sustainability

Including:

• Household waste management

• Treatment of human excreta

• Fecal sludge management

• Maintenance of Open Defecation Free (ODF) status

2. Drinking Water and Water Conservation

Including:

• Supply of drinking water

• Rainwater harvesting

• Water recycling and reuse

These investments are crucial for ensuring healthy, resilient and sustainable rural communities.

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Strengthening Grassroots Democracy

The release of more than ₹1,133 crore underscores the Union Government’s commitment to empowering Panchayati Raj Institutions, strengthening rural infrastructure, and advancing decentralized governance in line with the vision of cooperative federalism.