Centre Releases Second Installment of XV FC Untied Grants to Five States to Strengthen Rural Local Governance

The Union Government has sanctioned and released the second installment of Fifteenth Finance Commission (XV FC) Untied Grants for the financial year 2025–26 to Panchayati Raj Institutions (PRIs) and Rural Local Bodies (RLBs) in Bihar, Haryana, Himachal Pradesh, Uttar Pradesh and West Bengal.

The release is aimed at further empowering grassroots governance structures and enabling need-based, location-specific development at the village, block and district levels.

State-Wise Allocation Details

Under the current tranche, substantial financial assistance has been provided to eligible rural local bodies across the five states.

Bihar has received Rs. 80,240.00 lakhs (Rs. 802.40 crores), benefiting:

• All 38 District Panchayats (DPs)

• 533 Block Panchayats (BPs)

• 8,053 Gram Panchayats (GPs)

In addition, Rs. 139.10 lakhs (Rs. 1.39 crores) from the withheld portion of the first installment has been released to 3 Block Panchayats and 7 Gram Panchayats that have now become eligible.

Haryana has been allocated Rs. 19,762.70 lakhs (Rs. 197.63 crores), covering:

• 19 eligible District Panchayats

• 138 Block Panchayats

• 6,194 Gram Panchayats

A further Rs. 249.80 lakhs (Rs. 2.50 crores) has been released from earlier withheld funds to 1 District Panchayat, 4 Block Panchayats and 30 Gram Panchayats that subsequently met eligibility criteria.

Himachal Pradesh has received Rs. 6,830.03 lakhs (Rs. 68.30 crores), covering:

• All 12 District Panchayats

• 80 eligible Block Panchayats

• 3,602 Gram Panchayats

An additional Rs. 34.53 lakhs (Rs. 0.35 crores) has been released to 26 newly eligible Gram Panchayats.

Uttar Pradesh, the largest beneficiary in this tranche, has received Rs. 1,55,940.00 lakhs (Rs. 1,559.40 crores), benefiting:

• All 75 District Panchayats

• 826 Block Panchayats

• 57,694 Gram Panchayats

Further, Rs. 1,101.64 lakhs (Rs. 11.02 crores) from the withheld portion has been released to 2 District Panchayats, 13 Block Panchayats and 61 Gram Panchayats that attained eligibility.

West Bengal has been allocated Rs. 68,085.79 lakhs (Rs. 680.86 crores), covering:

• 21 eligible District Panchayats

• 335 Block Panchayats

• 3,225 Gram Panchayats

Institutional Mechanism for Grant Release

The release of XV Finance Commission grants follows a structured inter-ministerial process. The Ministry of Panchayati Raj and the Ministry of Jal Shakti (Department of Drinking Water and Sanitation) recommend the release of grants to States for Rural Local Bodies. Based on these recommendations, the Ministry of Finance formally sanctions and disburses the funds.

The Finance Commission grants are released in two installments during a financial year, subject to eligibility conditions and compliance requirements by the respective local bodies.

Purpose and Utilisation of Untied Grants

The Untied Grants are designed to give Panchayati Raj Institutions greater autonomy in addressing location-specific needs. These funds can be utilised under the Twenty-Nine Subjects listed in the Eleventh Schedule of the Constitution, which include sectors such as agriculture, rural housing, roads, health, education, social welfare and local infrastructure development.

However, these grants cannot be used for salaries or other establishment-related expenditures. The objective is to ensure that funds are directed towards development works and public service delivery rather than administrative overheads.

Role of Tied Grants in Basic Services

In addition to Untied Grants, the Finance Commission also provides Tied Grants to support essential basic services. These are earmarked specifically for:

• Sanitation and maintenance of Open Defecation Free (ODF) status

• Management and treatment of household waste

• Human excreta and faecal sludge management

• Supply of drinking water

• Rainwater harvesting

• Water recycling initiatives

These targeted interventions aim to strengthen rural sanitation systems and ensure sustainable access to safe drinking water, aligning with national priorities under Swachh Bharat and Jal Jeevan Mission frameworks.

Strengthening Grassroots Democracy

The release of the second installment of XV FC grants reflects the Centre's continued emphasis on decentralised governance and fiscal empowerment of rural local bodies. By enabling Panchayats to address community-specific priorities, the government aims to enhance participatory development and improve service delivery at the grassroots level.

With substantial allocations flowing directly to district, block and village-level institutions, the initiative reinforces the constitutional vision of strengthening Panchayati Raj as a cornerstone of rural development and democratic decentralisation.