G.O. (Ms) No.26, Capital Grant Fund for 2021-22

What the document does

G.O. (Ms) No. 26 dated 11 March 2022, issued by the Tamil Nadu Rural Development and Panchayat Raj Department, provides funding for capital works through rural local bodies. The Government sanctions a Capital Grant Fund of Rs.1,229,84,75,000 and releases Rs.424,00,43,200 as the second instalment for 2021-22.

The Director of Rural Development and Panchayat Raj is authorised to draw and disburse the released amount. The expenditure is classified as grants for creating capital assets for rural local bodies.

How the Capital Grant Fund works

The Capital Grant Fund was established to replace the Infrastructure Gap Filling Fund. The funding structure described in G.O. (Ms) No. 26 includes:

• Twenty per cent of the aggregate State Finance Commission devolution intended for rural local bodies is paid into the Capital Grant Fund.
• Twenty per cent of the Capital Grant Fund is reserved for projects considered important at the State level.
• State-level projects must be identified and approved by a committee consisting of the Secretary to Government, Rural Development and Panchayat Raj Department, the Director of Rural Development and Panchayat Raj, a Finance Department representative and the Member Secretary of the State Planning Commission.
• The remaining 80 per cent is distributed district-wise using the formula for horizontal distribution among District Panchayats.
• District Planning Committees decide project-wise allocations under guidelines issued by the Rural Development and Panchayat Raj Department.

Distribution framework

The State Finance Commission grant for rural local bodies is shared among District Panchayats, Panchayat Unions and Village Panchayats in the ratio 8:37:55. Horizontal distribution is based on:

• Total population from the 2011 Census, 60 per cent.
• Scheduled Caste and Scheduled Tribe population, 15 per cent.
• Area, 15 per cent.
• Per capita consumption expenditure distance, 10 per cent.

Who is affected

G.O. (Ms) No. 26 directly concerns the Director of Rural Development and Panchayat Raj, District Collectors, treasury authorities and rural local bodies receiving capital grants. It does not state any change to private land ownership, land classification, registration, planning permission or property transaction requirements. Property buyers and owners may be affected only indirectly where local bodies use the grants for capital assets or public projects in their area.