Centre Releases ₹444 Crore XV Finance Commission Grants to Odisha’s Rural Local Bodies

The Union Government has released the Fifteenth Finance Commission (XV FC) Grants for Rural Local Bodies (RLBs) in Odisha for the Financial Year 2025–26, marking a significant step in strengthening local self-governance and rural development in the state.

According to the official communication, the latest release includes the second installment of Untied Grants amounting to ₹342.5964 crore for 20 District Panchayats (Zilla Parishads), 296 Block Panchayats (Panchayat Samitis), and 6,734 Gram Panchayats. In addition, the withheld portion of the first installment of Untied Grants, totaling ₹101.7815 crore, has now been disbursed to 20 Zilla Parishads, 233 Panchayat Samitis, and 649 Gram Panchayats across Odisha.

Together, these funds represent a total release of ₹444.38 crore, directed toward enhancing the administrative, infrastructural, and service delivery capacities of rural local bodies under the decentralization framework established by the Constitution.

Empowering Local Governance Through Finance Commission Grants

The XV Finance Commission, chaired by N.K. Singh, has recommended a formula-based system for the transfer of funds to local bodies to strengthen fiscal federalism and grassroots governance. These grants are released by the Ministry of Finance upon the recommendation of the Ministry of Panchayati Raj (MoPR) and the Ministry of Jal Shakti (Department of Drinking Water and Sanitation).

Funds are released in two installments each financial year, contingent upon states fulfilling stipulated performance and transparency conditions, such as timely audits, online reporting, and improved local governance practices.

Utilization of Untied and Tied Grants

The XV Finance Commission divides grants to Panchayati Raj Institutions (PRIs) into two main categories — Untied Grants and Tied Grants — each serving distinct objectives.

• Untied Grants: These funds provide flexibility to local governments to meet location-specific needs within the 29 subjects listed in the Eleventh Schedule of the Constitution. This includes areas such as rural roads, housing, agriculture, poverty alleviation, and rural electrification. However, they cannot be used for salaries or establishment costs, ensuring that the funds directly benefit community-level development initiatives.

• Tied Grants: These are mandated for specific sectors, especially those critical to public health and sanitation. The funds are used for maintaining Open Defecation Free (ODF) status, solid and liquid waste management, drinking water supply, rainwater harvesting, and water recycling. The tied grants ensure that rural areas maintain the gains achieved under national flagship programs like the Swachh Bharat Mission (Gramin) and the Jal Jeevan Mission.

Strengthening Panchayati Raj Institutions in Odisha

The latest release of funds underscores the Union Government's commitment to empowering Panchayati Raj Institutions (PRIs) — the third tier of governance — as effective agents of rural transformation. Odisha has 30 districts, and under the current release, 20 districts qualified for receiving XV FC grants based on compliance with national-level performance benchmarks.

These grants will enable District Panchayats, Block Panchayats, and Gram Panchayats to take up activities such as the construction of rural roads, drainage systems, community assets, health and education facilities, and the promotion of local livelihoods and skill development.

Transparency and Accountability in Fund Utilization

The Ministry of Panchayati Raj has emphasized that all RLBs and PRIs must ensure transparency, proper accounting, and public disclosure in fund utilization. The use of digital platforms such as e-GramSwaraj and Public Financial Management System (PFMS) is mandatory for recording, tracking, and reporting financial transactions.

These digital systems enable real-time monitoring of fund disbursement and expenditure, ensuring that the benefits of the Finance Commission grants reach the intended beneficiaries efficiently and without leakages.

Advancing Rural Development and Viksit Bharat 2047 Vision

The XV FC grants are a critical pillar in achieving the government's Viksit Bharat @ 2047 vision — a roadmap for inclusive and sustainable national development. By directly funding local governments, the Centre aims to deepen participatory democracy, improve service delivery at the grassroots, and promote self-reliant villages (Atmanirbhar Gram Panchayats).

Officials noted that empowering local governments through fiscal devolution helps create context-specific development models that reflect local priorities and challenges — a cornerstone of India's bottom-up development strategy.

The Ministry of Panchayati Raj reaffirmed that such periodic fund releases are designed to enhance financial autonomy and strengthen the institutional capacity of PRIs to plan, execute, and monitor development programs that align with both national and state-level goals.

With this latest release, Odisha's Panchayati Raj Institutions are expected to accelerate their efforts toward improving basic infrastructure, sanitation, water management, and livelihood support, contributing to more resilient, inclusive, and prosperous rural communities.