Introduction to the Topic:

The Finance Commission is a constitutional body constituted every five years by the President of India under Article 280 of the Constitution. Its primary responsibility is to recommend the distribution of tax revenues between the Union and the States and among the States themselves. The 15th Finance Commission (FC-XV) was constituted in November 2017 under the chairmanship of Shri N.K. Singh. It made recommendations for the period 2021–22 to 2025–26, with a strong focus on strengthening grassroots governance through direct grants to Rural Local Bodies (RLBs).

Objectives:

• To ensure equitable distribution of tax revenues among states.
• To empower Panchayati Raj Institutions (PRIs) by enhancing their financial autonomy.
• To promote sustainable development in rural areas through targeted investments.
• To ensure transparent and accountable utilization of grants through structured planning and monitoring mechanisms.

Key Components/Features:

Criteria for Devolution:
The 15th FC used six criteria to determine state-wise fund allocation:

• Income Distance (45%)
• Population (2011) (15%)
• Area (15%)
• Forest & Ecology (10%)
• Demographic Performance (12.5%)
• Tax Effort (2.5%)

Grants to Rural Local Bodies:

Total grants are divided as:

• Gaon Panchayat (GP): 70%
• Anchalik Panchayat (AP): 15%

• Zilla Parishad (ZP): 15%

  Two components:

  • Basic (Untied) Grant – 40%: Flexible use for local priorities.
  • Tied Grant – 60%: Specifically for sanitation, drinking water, rainwater harvesting, and water recycling.

Administrative Component:Up to 10% of Basic Untied Grants can be used for hiring professionals, IT infrastructure, quality inspection, and capacity building.

Implementation Guidelines:

Achievements/Success Stories of Assam State:

Assam has shown remarkable initiative in the effective utilization of 15th FC grants. Highlights include:

1. Strengthening of rural infrastructure like roads, crematoriums, public libraries, and LED street lights across GPs.
2. Promotion of health and nutrition through construction and renovation of Anganwadi Centres and schools.
3. Establishment of solar-powered drinking water systems in remote areas, ensuring access to clean water.
4. Successful implementation of waste management systems in multiple districts aligning with Swachh Bharat Mission (Gramin).
5. Introduction of community ponds and green spaces promoting environment and recreation.
6. These interventions have significantly contributed to building self-reliant and empowered rural local bodies across Assam