Finance Commission Unrestricted Grant

Why in News?

• The Central Government has released the second installment of the Fifteenth Finance Commission Grants for rural local bodies in West Bengal during the financial year 2024-25.

Key Points:

• This grant has been provided as an unrestricted grant amounting to Rs 694.4 crore.
• A part of Rs 4.9 crore of the first installment has been withheld.
• This amount has been allocated for 21 eligible district panchayats, 326 eligible block panchayats and 3220 eligible gram panchayats.

Unrestricted Grant under Finance Commission:

• It is an amount given to local bodies to meet specific needs in their area.
• The Government of India recommends the release of this grant to the states through the Ministry of Panchayati Raj and the Ministry of Jal Shakti (Department of Drinking Water and Sanitation).
• Thereafter, this grant is released by the Ministry of Finance.
• Use of Unrestricted Grant:
  • Panchayati Raj Institutions/Rural Local Bodies use these grants to meet location-specific needs under 29 subjects mentioned in the Eleventh Schedule of the Constitution.

Use of Unrestricted Grant:

• This grant can be used for the following works except salaries and other establishment costs-
  • For basic services for sanitation and maintenance of ODF status
  • Management and treatment of domestic waste
  • Human excreta and faecal sludge management
• For services related to water management, which includes-
  • Supply of drinking water
  • Rainwater harvesting
  • Water recycling

Finance Commission:

• There is a provision for this in Article 280 of the Constitution of India 
• It is a quasi-judicial body.
• It is constituted by the President every 5th year or earlier as required.

 Structure of Finance Commission:

• The Finance Commission consists of a chairman and four other members.
• They are appointed by the President.

Functions of the Finance Commission:

• To evaluate the financial conditions of the Union and the States
• To recommend the distribution of taxes among the states
• To lay down the principles for the distribution of these taxes among the states
• To recommend revenue deficit grants and instructional and unrestricted grants for the states
• Any other subject specified to the Commission by the President in the interest of finance