14th Finance Commission: Panchayats get Rs 2 lakh crore gift

NEW DELHI: The 14th Finance Commission, whose recommendations were accepted by the NDA government, has asked for assigning over Rs 2 lakh crore between 2015 and 2020 to Panchayats to provide basic services.

Though bulk of the grants come without strings attached, a fraction of grants has been linked to improvements displayed by them. The primary emphasis has been on provision of basic services like infrastructure for sewage, sanitation and water supply.

Finance Commission has recommended distribution of grants to states for local bodies using 2011 population data with weight of 90% and area with weight of 10%. The grants to States will be divided into two, a grant to duly constituted Gram Panchayats and a grant to duly constituted Municipal bodies, on the basis of rural and urban population.

The Commission has recommended grants in two parts; a basic grant, and a performance grant, for duly constituted Gram Panchayats and municipalities. The ratio of basic to performance grant is 90:10 with respect to Panchayats and 80:20 with respect to Municipalities.

The transfers in the year 2015-16 will be Rs 29,988 crore.

On Tuesday, the Narendra Modi government came good on its pledge to treat the states as partners in long-term development in a spirit of cooperative federalism by accepting a key recommendation of the 14th Finance Commission.

The Centre will start transferring a much bigger share of central taxes to states -the 10 percentage point jump to 42% will translate into an additional, estimated Rs 1.78 lakh crore in the next fiscal year.