FIFTEENTH FINANCE COMMISSION GRANTS TO URBAN LOCAL BODIES:
The Fifteenth Finance Commission has recommended Basic Grants for the Urban Local Bodies across the countries for the period 2021-2026 with the objective of strengthening and improving delivery of basic services. Grants have been recommended on the basis of two broad categories namely Category-I Cities (Million Plus Cities/ MPC)which include urban agglomeration/cities with more than one million population and Category-II Cities (Non Million Plus Cities/ NMPC) which include cities with less than one million population. All 39 ULBs in Nagaland fall under NMPCs Category.
The 15th FC Grants to the ULBs are released on fulfillment of mandatory compliance and under two major components, namely UNTIED GRANTS and TIED GRANTS.
UNTIED Grants: 40% of Untied Grants can be used by the ULBs on felt needs under the eighteen subjects enshrined in the Twelfth Schedule except for salaries and other establishment costs. UNTIED Grants provide flexibility to ULBs and may be utilized for critical urban infrastructure, service delivery improvements and other priority requirements. These funds enable ULBs to address location-specific urban challenges such as road repairs, street lighting, drainage improvement and minor infrastructure gaps.
TIED Grants: 60% of the total alocation is earmarked for TIED GRANTS for strengthening the delivery of basic services, out of which 50% is earmarked specificaly for ‘Sanitation, Solid Waste Management and attainment of star ratings as developed by MoHUA and the remaining 50% is for ‘Drinking Water, Rainwater Harvesting and Water Recycling’ which includes projects pertaining to water supply augmentation, sewage and septage management etc.
Our urban local bodies are entirely dependent on Central Finance Commission Grants to meet their requirements for priority infrastructures and basic services delivery.
‘Urban Governance’ and ‘Municipal Finance’ being critical reform agendas; the 15th Finance Commission has prescribed certain mandatory conditions for claiming the Grants. As per the guidelines, every ULB has to fulfill the following entry level conditions to avail any Grants.
For availing any grants from 2022-2023 onwards, Grants shall be released only after the following requirements are fulfilled;
1. Audited Accounts of the ULBs to be made available online
2. Notification of floor rates for property tax
3. ULBs to show consistent improvement of collections in line with State GSDP
The State could avail funds under the 15th FC Grants during the first year that is 2020-21 as there were no preconditions. The State received first and second instalment of UNTIED grants 2021-22 and 1st Instalment of TIED Grants 2021-22.
From 2022-23 onwards, the State may not be able to access the remaining Grants since property tax has been exempted from the NMA 2023.
Notable works taken up by ULBs during 2025-26 under 15th FC.