G.O. (Ms) No.124, Release of First Instalment of Basic Grant (Untied), 2023

What the document does

Government Order (Ms) No.124 dated 25 October 2023 sanctions Rs.557,98,61,000 for distribution to eligible rural local bodies in Tamil Nadu. The money is the first instalment of the Fifteenth Finance Commission Basic Grant (Untied) for 2023-24.

The Director of Rural Development and Panchayat Raj is authorised to draw and disburse the sanctioned amount. The State Finance Department must transfer the grant to the relevant entities within ten working days of receiving it from the Union Government, without making any deduction.

Who receives the funding

The sanctioned amount is distributed across the three levels of rural local government:

• Rs.446,34,61,000 for 12,519 eligible Village Panchayats out of 12,525 Village Panchayats.
• Rs.83,73,00,000 for all 388 Block Panchayats, also described as Panchayat Unions.
• Rs.27,91,00,000 for all 36 District Panchayats.

The approved vertical sharing ratio is 5:15:80 for District Panchayats, Block Panchayats and Village Panchayats respectively. Distribution among entities within each level follows the multiplier factor recommended by the Sixth State Finance Commission. The Government of India also stated that distribution within a level should be based on population and area in the ratio of 90:10, or follow the accepted recommendations of the latest State Finance Commission.

How the money may be used

The Fifteenth Finance Commission Basic Grant is untied funding for locally felt needs under the twenty nine subjects in the Eleventh Schedule of the Constitution.

Key conditions include:

• The funding cannot be used for salaries or other establishment expenditure.
• Expenditure on auditing accounts by external agencies approved by the State Government may be paid from the grant.
• The Fifteenth Finance Commission framework divides rural local body grants into 40 per cent untied grants and 60 per cent tied grants.
• Of total rural local body grants, 30 per cent is earmarked for drinking water, rainwater harvesting and water recycling.
• A further 30 per cent is earmarked for sanitation, maintenance of open defecation free status, household waste treatment, and management of human excreta and faecal sludge.
• Utilisation must follow the guidelines issued by the Rural Development and Panchayat Raj Department in Government Order (Ms) No.18 dated 3 February 2021.

Relevance to property owners

Government Order (Ms) No.124 concerns public funding for rural Panchayats. It does not grant land rights, alter property records or approve changes in land use, although the funded local services may operate in rural areas where property owners live or own land.