• 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.