New Delhi: The Union Govt ₹1,500 crore as Fifteenth Finance Commission grants for FY26 to strengthen local governance in six states — Telangana, Rajasthan, Maharashtra, Uttarakhand, Mizoram and Meghalaya — the panchayati raj ministry said in a statement on Tuesday.
The aim of this step is to enable orientation according to needs rural development and improvement of basic services at the local level, it said.
The 15th Finance Commission covered a five-year period from FY22 to FY26, which ends on March 31. Current versions are part of this final year, installments due within the grant period. The total amount of commission remuneration for rural local authorities was ₹4.36 trillion.
Release of funds is state specific and tranche based subject to submission of utilization certificates, fulfillment of performance conditions and fulfillment of eligibility criteria.
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The final tranche of funds, channeled through the ministries of panchayati raj and jal shakti and disbursed by the finance ministry, includes tied and untied grants to panchayati raj institutions (PRIs) and rural local bodies.
Tied grants are funds that must be used for specific essential services such as sanitation, maintenance of a defecation free (ODF) condition, waste management and drinking water supply, including rainwater harvesting and recycling.
Untied grants allow local authorities to address site-specific development needs within the 29 entities listed in the Eleventh Schedule of the Constitution, excluding salaries and establishment costs.
These funds are released in two annual installments and are intended to strengthen the financial autonomy of local governments.
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State allocation
Among the states, Rajasthan received ₹315.61 crore as the second installment of untied grants for FY26, covering all district and block panchayats and eligible gram panchayats. Telangana was allotted ₹247.94 crore as the first installment of untied grants to over 12,600 gram panchayats, the ministry said.
Maharashtra saw one of the trickier payments when the Center released it ₹109.06 crore each as retained installments of the first and second installments of tied grants for FY26, in favor of other district and block panchayats. The state also received ₹116.97 million and ₹329.21 crore as pending tied grants for FY25, along with Rs ₹72.70 crore each as retained untied grants for the period 2025-26.
Among the hilly states, Uttarakhand received ₹91.31 crore as the second installment of untied grants for FY26, covering all 13 district panchayats, 95 block panchayats and 7,784 eligible gram panchayats. It also has an appendix ₹1.84 crore from earlier withheld funds, bringing 216 more gram panchayats.
Meghalaya received ₹27 million as untied grants and ₹22.20 crore as tied grants covering autonomous district councils and village councils, it said.
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Some grants are occasionally withheld due to non-compliance with conditions such as delay in submitting audited accounts or utilization certificates, failure to meet sector-specific conditions (such as water/sanitation targets for tied grants), etc. Funds are released once conditions are met.
According to experts, these cumulative releases extend support to thousands of gram panchayats and local bodies, and the latest release comes at a time when the Center is seeking to strengthen decentralized governance by ensuring predictable and performance-linked fiscal transfers to local bodies.
“As rural infrastructure and basic services are increasingly seen as critical for inclusive growth, timely financial flows under the Finance Commission are expected to play a key role in improving service delivery and accountability at the local level,” said Ashish Kumar Singh, president of the Citizens’ Forum, a civil rights group in Bihar.
India has more than 2.5 lakh rural local bodies, including about 2.6 lakh gram panchayats, along with thousands of block and district panchayats forming the three-tier panchayati raj system.
