Fifteenth Finance Commission (FC-XV)

The Fifteenth Finance Commission was constituted by the President of India under Article 280 of the Constitution on 27th November 2017, to make financial recommendations for the period 2020–2026.

  • Chairman: Shri N.K. Singh, former Member of Parliament and former Secretary to the Government of India.

Types of Grants Recommended by FC-XV

The Commission recommended various grants to ensure fiscal federalism and strengthen the financial health of both states and local governments. Two major types of grants include:

1. Revenue Deficit Grants

  • Aimed at bridging the gap between revenue and expenditure for states that might otherwise struggle to maintain essential services.

  • These grants are provided only to specific states identified by the Commission as having post-devolution revenue deficits.

2. Grants to Local Bodies

These grants are intended to empower local self-governments and are divided into two main components:

a. Untied Basic Grants

  • Can be used by local bodies for a wide range of functions.

  • These functions are generally outlined in the 12th Schedule of the Constitution, which includes areas like public health, sanitation, roads, and street lighting.

  • These grants give flexibility to local bodies in prioritizing local needs.

b. Tied Grants

  • These are conditional grants, tied to specific purposes to ensure focus on priority sectors.

  • FC-XV identified two key sectors for tied grants:

    • Drinking Water Supply

    • Solid Waste Management

  • The aim is to improve public health and sanitation outcomes across rural and urban areas.