Centre Releases Over Rs 3,324 Crore to Boost Rural Local Bodies in Five States

New Delhi, Feb 2026 : The Union government has released more than Rs 3,324 crore to strengthen rural local bodies across Bihar, Uttar Pradesh, Haryana, Himachal Pradesh and West Bengal under the second instalment of the 15th Finance Commission’s untied grants for the financial year 2025–26, officials said on Thursday. The funds are aimed at empowering Panchayati Raj institutions and improving grassroots-level governance and service delivery in rural areas.

Among the beneficiary states, Bihar has received Rs 802.40 crore, covering all 38 district panchayats, 533 block panchayats and 8,053 gram panchayats. In addition, the state has been given Rs 1.39 crore from the previously withheld portion of the first instalment, following the fulfilment of eligibility conditions. Officials noted that this additional release would further support local development initiatives at the village and block levels.

Uttar Pradesh has emerged as the largest recipient in this tranche, with an allocation of Rs 1,559.40 crore. The amount will benefit all 75 district panchayats, 826 block panchayats and as many as 57,694 gram panchayats across the state. The Centre has also released Rs 11.016 crore from the earlier withheld amount after eligible local bodies met the required norms.

West Bengal has been allocated Rs 680.86 crore under the same instalment. The funds will be utilised by 21 eligible district panchayats, 335 block panchayats and 3,225 gram panchayats to address local development priorities and strengthen rural infrastructure.

Haryana has received Rs 197.627 crore for its panchayats, along with an additional Rs 2.5 crore released from the withheld portion of the first instalment to newly eligible local bodies. Himachal Pradesh has been allocated Rs 68.30 crore, supplemented by Rs 0.35 crore for 26 newly eligible gram panchayats, officials said.

The release of 15th Finance Commission grants to states for Panchayati Raj institutions is recommended jointly by the Ministry of Panchayati Raj and the Ministry of Jal Shakti, after which the funds are disbursed by the Ministry of Finance. These grants are released in two instalments each financial year, subject to compliance with prescribed conditions.

Untied grants can be utilised by rural local bodies to meet location-specific needs under the 29 subjects listed in the Eleventh Schedule of the Constitution, excluding salaries and establishment costs. Tied grants, on the other hand, are earmarked for basic services such as sanitation, maintenance of open defecation-free status, management of household waste and faecal sludge, as well as drinking water supply, rainwater harvesting and water recycling.

Team Maverick.