- The Fifteenth Finance Commission (XV FC) in its report for 2020-21 has recommended grants for Rural Local Bodies (RLBs) in 28 States.
- The grants have been recommended for all tiers of the Panchayati Raj and also to the Fifth and sixth schedule areas.
- The grants are provided in two parts, namely,
    (i) Basic (Untied) Grants and
    (ii) Tied Grants in the ratio of 50:50.
- The basic grants are untied and can be used by RLBs for location-specific felt needs, except for salary or other establishment expenditure.
- The tied grants can be used for the basic services of
- (a) sanitation and maintenance of Open-Defecation Free (ODF) status and
- (b) Supply of drinking water, rain water harvesting and water recycling.
- The RLBs shall, as far as possible, earmark one half of these Tied 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.
