16th Finance Commission recommends one-time grant to urban local bodies for merging peri-urban villages

The 16th Finance Commission has recommended a one-time grant to urban local bodies with population above one lakh as an urbanisation premium component for merging peri-urban villages to it. The commission also stipulates entry-level conditions for clearance of grant to local bodies, including publishing of audited figures from the previous financial years.

For an urban local body to qualify for the performance grant, the revenue growth in the previous financial year should be at least 5% more compared to the year prior to that. In case only some urban local bodies from a State are satisfying these conditions, the grant that the State will get will be proportional to that. For the State to qualify for the State performance component of the grant, it should have disbursed to local bodies at least 20% of the grant recommended by the 16th Finance Commission in the previous year.

No city from Keralam

No city from Keralam has been included among the urban growth centres that have been selected for a special infrastructure grant for comprehensive waste water management programmes. Only upto 20% of the untied grant can be used for road construction or maintenance works. The urban local bodies are required to prepare a city action plan by considering all the local needs to qualify for the grants.

To get the first instalment of the grant, the local bodies have to ensure that they are not holding unspent amounts from the 15th Finance Commission allocations. The local bodies will be considered for the next instalment only if at least 50% of the previous allocation is utilised. The 16th Finance Commission focuses mainly on cleanliness, solid waste processing and water management in the period from 2026-27 to 2030-31.