×

UPSC Courses

DNA banner

DAILY NEWS ANALYSIS

  • 18 July, 2020

  • 6 Min Read

Aid for Rural Local Bodies-Finance commission

Aid for Rural Local Bodies-Finance commission

Paper-2 Governance (Mains)

Finance Commission

It is a constitutional body, that determines the method and formula for distributing the tax proceeds between the Centre and states and among the states as per the constitutional arrangement and present requirements. Under Article 280 of the Constitution, the President of India is required to constitute a Finance Commission at an interval of five years or earlier.

The 1st FC was set up in 1951 and there have been fifteen so far. The 15th FC headed by N.K. Singh was constituted by the President of India on 27th November 2017, against the backdrop of the abolition of the Planning Commission and the introduction of the Goods and Services Tax (GST). In November 2019, the Union Cabinet approved the 15th FC to submit its first report for the first fiscal year 2020-21 and to extend its tenure to provide for the presentation of the final report covering Financial Years 2021-22 to 2025-26 by 30th October, 2020.

In News:

Recently, the Ministry of Finance has released a part of grants-in-aid of Rs. 15187.50 crore for around 2.63 lakh Rural Local Bodies (RLBs) of 28 States.

This has been made on the recommendations of the Ministry of Panchayati Raj and the Department of Drinking Water and Sanitation, Ministry of Jal Shakti.

This forms part of the Tied Grant as recommended by the 15th Finance Commission (FC) for the Financial Year (FY) 2020-2021.

Imp Points

  • Recommendation of 15th FC: It recommended the grant in aid of Rs. 60,750 crore for (FY 2020-21) the RLBs which is the highest ever allocation made by the Finance Commission in any single year.

  • Allocation: It will be allocated in two parts, namely Basic Grant and Tied Grant in 50:50% mode. Basic Grant: These grants are untied and can be used by RLBs for location-specific needs, except for salary or other establishment expenditure
  • Untied funds are utilised for the works of emergent nature which are normally not covered under the schemes decentralized at the district level.

Tied Grants: These are used for the basic services of:

      • Sanitation and maintenance of Open-Defecation Free (ODF) status.
      • Supply of drinking water, rain water harvesting and water recycling.
      • The RLBs shall, as far as possible, earmark one half of these grants each to these two critical services.
      • However, if any RLB has fully saturated the needs of one category it can utilize the funds for the other category.

Distribution: The State Governments will be distributing the grants to all the tiers of of the Panchayati Raj -village, block and district including the traditional bodies of 5th and 6th Schedule areas based on the accepted recommendations of the latest State Finance Commission (SFC) and in conformity with the recommendations of the 15th FC.

Assistance: The Ministry of Panchayati Raj would support the states in effective utilization of the grants by providing Web/IT enabled platforms for planning, monitoring, accounting / auditing of the works and funds flow at the level of each of the RLBs.

Significance:

    • Fighting Covid 19: It would help RLBs in providing employment. E.g. migrant laborers who have returned to their native places owing to Covid-19 pandemic situation.
    • Delivery of Basic Services: Availability of this fund will boost RLBs effectiveness in delivery of basic services to the rural citizens.
    • Rural Infrastructure: It will augment the rural infrastructure in a constructive way e.g construction of roads, supply of water etc.

Source: PIB


Sun, Solar Missions & Solar Phenomenon

Sun, Solar Missions & Solar Phenomenon Context: This topic is important for UPSE Prelims and Mains GS Paper3. Aurora An aurora also known as the polar lights or aurora polaris, is a natural light display in Earth's sky, predominantly seen in high-latitude regions (around the Arctic&nb

Changes in the Prompt Corrective Action norms for bank

Changes in the Prompt Corrective Action norms for banks Context: This topic is important for UPSE GS Paper 3. What will commercial banks under scrutiny need to do to get out of the restrictions imposed by the central bank? The story so far: The RBI issued a notification on November 2 revising norms for commercial banks to be placed under t

Study on Countries’ commitment on Climate Change

Study on Countries’ commitment on Climate Change Context: This topic is important for UPSE GS Paper 3. The findings, while optimistic, come amidst the deliberations underway at Glasgow. How effective are climate change pledges made by countries in containing global warming?  A study published Friday in the journal Science fin

National Investment and Manufacturing Zones (NIMZ)

About National Investment and Manufacturing Zones (NIMZ) The Government of India (GoI) has announced a National Manufacturing Policy, 2011, with the objective of enhancing the share of manufacturing in GDP to 25% within a decade and creating 100 million jobs. NIMZs are one of the important instruments to achieve it. As per the Policy, &ldqu

International Financial Services Centre (IFSC)

What is an International Financial Services Centre (IFSC)? An IFSC caters to customers outside the jurisdiction of the domestic economy.  Such centres deal with flows of finance, financial products and services across borders.  London, New York and Singapore can be counted as global financial centres. 

Students Achievement

Search By Date

Newsletter Subscription
SMS Alerts