The Centre released over Rs 342 crore to rural local bodies in Tamil Nadu and Assam under the 15th Finance Commission Untied Grants for FY26, boosting Panchayati Raj Institutions’ capacity to meet local needs, improve sanitation, and strengthen grassroots governance.
In a major push towards empowering grassroots governance, the Centre has released more than Rs 342 crore for rural local bodies (RLBs) in Tamil Nadu and Assam under the 15th Finance Commission’s (XV-FC) Untied Grants for the financial year 2025–26. The disbursement, announced by the Ministry of Panchayati Raj, marks a continuation of the government’s commitment to strengthening Panchayati Raj Institutions (PRIs) and enabling them to address local developmental needs effectively.
Fund Allocation in Tamil Nadu
According to official figures, the first installment of untied grants for Tamil Nadu amounts to Rs 127.586 crore. This financial assistance covers:
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2,901 eligible Gram Panchayats
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74 eligible Block Panchayats
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9 eligible District Panchayats
The release of these grants is expected to boost grassroots planning and enhance service delivery in critical sectors across rural Tamil Nadu. With these funds, local bodies will have greater flexibility in addressing location-specific needs, ranging from infrastructure improvements to essential services, while ensuring that resources reach the most vulnerable communities.
Fund Allocation in Assam
Assam has been allocated a significantly larger share, with the Centre releasing Rs 214.542 crore. The funds will cover:
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All 2,192 eligible Gram Panchayats
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156 eligible Block Panchayats
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27 eligible Zilla Parishads
This support is expected to play a crucial role in strengthening Assam’s rural governance framework. Local bodies in the state face diverse challenges, from improving rural connectivity and sanitation facilities to ensuring safe drinking water. The infusion of central funds will help these Panchayats respond more effectively to the immediate and long-term requirements of rural populations.
Role of the Finance Commission and Ministries
The 15th Finance Commission recommends these grants for states, which are then released by the Ministry of Finance on the advice of the Ministry of Panchayati Raj and the Ministry of Jal Shakti (Department of Drinking Water and Sanitation). The grants are disbursed in two installments during a financial year and are divided into two categories: tied and untied.
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Untied Grants: These can be used by Panchayati Raj Institutions for any felt developmental needs of the community, except for salaries and administrative costs.
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Tied Grants: These are earmarked for basic services, particularly in the areas of sanitation, maintenance of Open Defecation Free (ODF) status, solid and liquid waste management, treatment of human excreta, fecal sludge management, and improving access to safe drinking water through measures such as rainwater harvesting and water recycling.
This structured system ensures that while Panchayats enjoy flexibility in resource utilization, critical sectors such as sanitation and water supply also receive targeted attention.
Earlier Releases to Mizoram, Odisha, and Tripura
This announcement follows a similar release of over Rs 284 crore in August 2025 under XV-FC Untied Grants for Mizoram, Odisha, and Tripura.
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Mizoram received Rs 14.2761 crore for 827 eligible Village Councils.
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Odisha was allocated Rs 240.8149 crore for 6,085 Gram Panchayats and 63 Block Panchayats.
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Tripura received Rs 29.75 crore for 606 Gram Panchayats, 35 Block Panchayats, 8 Zilla Parishads, along with 587 Village Committees and 40 Block Advisory Committees.
These disbursements highlight the Centre’s consistent focus on strengthening local governance across diverse states, ensuring that rural development initiatives are more community-driven and sustainable.
Significance of the Move
The release of these funds comes at a time when rural areas across India face mounting challenges related to infrastructure gaps, sanitation management, and water supply needs. By empowering Panchayati Raj Institutions with financial autonomy, the government is fostering bottom-up governance, where solutions are identified and implemented locally.
Experts note that such grants are vital in reducing dependence on higher levels of administration, enabling Panchayats to act swiftly on pressing concerns such as waste management, water scarcity, and rural health services. Moreover, the untied nature of these funds allows local bodies to tailor their usage according to the unique socio-economic and geographic conditions of each region.
Looking Ahead
As India continues to focus on sustainable rural development, these financial transfers will play an important role in ensuring that governance is inclusive, participatory, and effective. By empowering Panchayats with funds and flexibility, the government aims to bridge gaps in service delivery, enhance quality of life in villages, and accelerate progress toward national development goals.
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With more than Rs 626 crore released across five states in just two months, the Centre is reaffirming its priority to strengthen grassroots democracy and enable local bodies to take the lead in India’s developmental journey.
