Union Government Releases ₹444 Crore under XV Finance Commission Grants to Rural Local Bodies in Odisha

Bhubaneswar: 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 move to strengthen 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 ₹342.59 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, totaling ₹101.78 crore, has now been disbursed to 20 Zilla Parishads, 233 Panchayat Samitis, and 649 Gram Panchayats across Odisha.

Together, these allocations amount to ₹444.38 crore, directed toward enhancing the administrative, infrastructural, and service delivery capacities of local bodies under the constitutional decentralization framework.

Empowering Local Governance Through Finance Commission Grants

The Fifteenth Finance Commission (XV FC), chaired by N.K. Singh, recommended a formula-based transfer of funds to strengthen fiscal federalism and grassroots governance. These grants are released by the Ministry of Finance following recommendations from 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 based on states fulfilling key performance and transparency benchmarks, including 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 Untied Grants and Tied Grants, each with specific purposes:

• Untied Grants: These provide flexibility to local governments to address location-specific needs under the 29 subjects listed in the Eleventh Schedule of the Constitution. Areas covered include rural roads, housing, agriculture, poverty alleviation, and rural electrification, though the funds cannot be used for salaries or establishment costs.
• Tied Grants: These are mandated for core sectors such as sanitation, drinking water, waste management, and rainwater harvesting. They support rural areas in maintaining Open Defecation Free (ODF) status and advancing national missions like Swachh Bharat Mission (Gramin) and Jal Jeevan Mission.

Strengthening Panchayati Raj Institutions in Odisha

The latest fund release reflects the Centre’s commitment to empowering Panchayati Raj Institutions (PRIs)—the third tier of governance—as key drivers of rural transformation. Of Odisha’s 30 districts, 20 qualified for XV FC grants based on compliance with performance criteria.

These funds will enable Zilla Parishads, Block Panchayats, and Gram Panchayats to take up initiatives such as the construction of rural infrastructure, drainage systems, community assets, and promotion of local livelihoods and skills.

Transparency and Accountability in Fund Utilization

The Ministry of Panchayati Raj has emphasized transparency and accountability in fund utilization. It has made it mandatory for all RLBs and PRIs to record, track, and report financial transactions through digital platforms such as e-GramSwaraj and the Public Financial Management System (PFMS).

These platforms ensure real-time monitoring of fund flow and expenditure, preventing leakages and guaranteeing that the benefits reach intended rural beneficiaries.

Advancing Rural Development and Viksit Bharat 2047 Vision

The XV FC grants form a vital part of the Viksit Bharat @ 2047 vision—India’s roadmap for inclusive, sustainable, and participatory development. By directly funding local governments, the Centre aims to deepen democracy, enhance service delivery, and build self-reliant villages (Atmanirbhar Gram Panchayats).

Officials affirmed that continued fiscal devolution will help local bodies design context-specific development models, aligning national goals with local priorities.

With this latest release, Odisha’s Panchayati Raj Institutions are expected to accelerate progress in basic infrastructure, sanitation, water management, and livelihood generation, contributing to stronger, more resilient, and inclusive rural communities.

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