Read or download the official PDF of this gazette notification issued by the Ministry of Panchayati Raj on 12th August 2026. Classified under Press Release.
Executive Summary
The Sixteenth Finance Commission has recommended grants totaling Rs. 4,35,236 Crore for Rural Local Bodies across 28 states for the 2026-31 award period. The Ministry of Panchayati Raj is focusing on enhancing financial self-reliance through Own Source Revenue (OSR) mobilization and ensuring transparency via digital monitoring portals. Key implementation guidelines were issued on May 21, 2026, to govern the disbursal and auditing of these funds.
Key Points / Main Content
Grant Allocation and Structure
Total recommended grants amount to Rs. 4,35,236 Crore for the period 2026-31, with Rs. 11,664 Crore specifically allocated to Chhattisgarh.
Grants are split into a Basic Grant (80%) and a Performance Grant (20%).
Basic Grants are further divided: 50% are "Tied" for specific uses, and 50% are "Untied" for general needs.
Performance Grants are 100% "Untied."
Fund Utilization and Restrictions
Tied Grants are strictly earmarked for 'Sanitation and Solid Waste Management' and 'Water Management.'
Untied Grants may be used for location-specific needs under the twenty-nine subjects of the Eleventh Schedule of the Constitution.
Own Source Revenue (OSR) Mobilization
A training module developed with IIM Ahmedabad has trained 2,75,893 participants on generating tax and non-tax revenue as of July 2026.
The SAMARTH Panchayat portal has been launched to facilitate digital tax demand, collection, and revenue tracking.
The SVAMITVA scheme provides a foundation for property tax growth through digital mapping of village areas.
The "Atma Nirbhar Panchayat Special Award" (ANPSA) was launched in 2025 to incentivize revenue augmentation.
Transparency and Oversight
The eGramSwaraj web portal integrates all financial functions, from planning to payment, and is linked with the Public Financial Management System (PFMS).
The AuditOnline application, launched in April 2020, enables online auditing of Panchayat accounts to ensure accountability.
Advisory "Model Own Source Revenue Rules" have been provided to States to help strengthen their legal frameworks.
Impact Analysis
Rural Local Bodies (RLBs) / Panchayati Raj InstitutionsImpact
They receive significant financial support and access to digital tools for revenue collection and financial management. This enhances their ability to address local needs and improves financial self-sufficiency.
Action Required
RLBs must utilize Tied Grants for mandated sanitation and water projects and use the SAMARTH and eGramSwaraj portals for all financial transactions and revenue tracking.
State and Union Territory GovernmentsImpact
Governments are provided with a guiding framework through the "Model Own Source Revenue Rules" to strengthen their institutional OSR structures.
Action Required
States are encouraged to adopt, adapt, or modify the advisory Model Rules to suit their local legal and administrative requirements.
Panchayat Functionaries and Elected RepresentativesImpact
They benefit from specialized capacity-building programs and training modules designed to improve their understanding of revenue generation.
Action Required
Functionaries must engage in training under the Rashtriya Gram Swaraj Abhiyan (RGSA) and ensure transparent utilization of funds through the AuditOnline platform.
Key Entities Referenced
Sixteenth Finance Commission (FC-16): The commission that recommended total grants of Rs. 4,35,236 Crore for Rural Local Bodies across 28 States for the 2026-31 period.
Rural Local Body (RLB) Grants: Grants comprising Basic and Performance components directed toward sanitation, water management, and other local infrastructure needs.
Eleventh Schedule of the Constitution: A constitutional schedule containing twenty-nine subjects that define the functional scope for utilizing untied grants by Rural Local Bodies.
eGramSwaraj: A web portal used for planning, accounting, and monitoring the utilization of Central Finance Commission grants by Panchayati Raj Institutions.
SVAMITVA Scheme: A mapping and technology initiative used to establish property taxes in rural areas to enhance the Own Source Revenue of local bodies.
Ministry of Panchayati Raj
RLB GRANTS RECOMMENDED BY SIXTEENTH
FINANCE COMMISSION
प्रव तथ: 12 AUG 2026 2:36PM by PIB Delhi
The Sixteenth Finance Commission (FC-16), for the award period 2026-31, has recommended total grants
amounting to Rs. 4,35,236 Crore for duly constituted Panchayati Raj Institutions/Rural Local Bodies
(RLBs) in all 28 States including Chhattisgarh. Out of this amount, Rs. 11,664 Crore has been
recommended for the State of Chhattisgarh.
The Ministry of Finance, Department of Expenditure vide letter dated 21.05.2026, has issued the
Operational Guidelines for implementation of the Rural Local Body Grants recommended by the
Sixteenth Finance Commission (FC-16). The FC-16 grants comprise two components, namely, Basic
Grant and Performance Grant, in the ratio of 80:20. The Basic Grant is further divided into Tied and
Untied Grants. 50 per cent of the Basic Grant is earmarked as Tied Grant, while the remaining 50 per cent
of the Basic Grant and the entire Performance Grant are Untied. The Tied Grants are directed towards
‘Sanitation and Solid Waste Management’ and/or ‘Water Management’. The Untied Grants can be utilised
by Rural Local Bodies for location-specific felt needs under the twenty-nine subjects enshrined in the
Eleventh Schedule of the Constitution.
The Ministry of Panchayati Raj has undertaken the following measures to enhance Panchayats' Own
Source Revenue (OSR) mobilization:-
(i) The Ministry of Panchayati Raj, in collaboration with IIM Ahmedabad, has developed a training
module on Own Source Revenue (OSR) to strengthen the financial self-reliance of Gram Panchayats. The
module helps elected representatives and Panchayat functionaries understand how OSR is generated
through tax and non-tax sources. As on 10.07.2026, under the Rashtriya Gram SwarajAbhiyan (RGSA), a
total of 2,75,893 participants have been trained through the Specialised Module on Own Source Revenue
(OSR).
(ii) In 2025, the Ministry of Panchayati Raj launched the Atma Nirbhar Panchayat Special Award
(ANPSA) to promote Atmanirbharta through the augmentation of Own Source Revenue (OSR) by
Panchayats.
(iii) The Ministry of Panchayati Raj (MoPR) has also developed the SAMARTH Panchayat portal, a
dedicated digital platform that facilitates the generation of tax & non-tax demands and collection thereof,
maintenance of tax registers, and online tracking of revenue.(iv) With a view to support States and Union Territories in strengthening their legal and institutional
framework for Own Source Revenue, the Ministry has formulated the Model Own Source Revenue Rules
as a guiding framework for consideration by the States/Union Territories. These Model Rules are advisory
in nature and are intended to serve as a reference for strengthening the Own Source Revenue framework
of Panchayats. States and Union Territories may adopt, adapt or modify these Model Rules, either in full
or in part, as considered appropriate, keeping in view their existing legal provisions, administrative
arrangements and local requirements.
(v) The implementation of the SVAMITVA (Survey of Villages Abadi and Mapping with Improvised
Technology in Village Areas) Scheme, launched in April, 2020, lays a robust foundation for the growth of
property taxes in rural areas, ultimately leading to enhanced OSR generation and improved financial
self-sufficiency for RLBs.
With the objective to improve oversight and monitoring and to ensure transparency and accountability in
the disbursal and utilisation of Central Finance Commission grants by Panchayati Raj Institutions in the
States, including Chhattisgarh, the Ministry has launched the eGramSwaraj web portal
(https://egramswaraj.gov.in) since April 2020, which integrates all financial functions of Panchayats-from
planning to payment. The progress data obtained from this system is displayed on the portal, available in
the public domain, for concurrent monitoring at the State, District, and Block levels.
The eGramSwaraj is integrated with the Public Financial Management System (PFMS) for the Panchayats
(GPs), facilitating real-time digital payments to vendors and service providers. Additionally, the
AuditOnline application was launched in April 2020 to enable online auditing of Panchayat accounts and
their financial management. This tool facilitates the transparent utilisation of Central Finance Commission
funds and enhances Panchayat-level financial oversight.
This information was given by Union Minister Shri Rajiv Ranjan Singh alias Lalan Singh in a written
reply in Rajya Sabha on 12th August 2026.
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