Grant for rural and urban local body was first recommended by which finance commission
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Answer:. Grants for rural local bodies: The three-tier model of governance envisioned in the Constitution assigns clear roles and responsibilities to Gram Panchayats. The Finance Commission recommendations ensure that these local bodies are adequately funded. In fact, nearly half of the Finance Commission Grants in Union Budget goes to village local bodies.
2. Grants for urban local bodies: In addition to units of self-governance at the village level, the Constitution also envisages cities as units of self-governance. Urban local bodies like municipal councils receive the largest chunk of Finance Commission Grants after Rural Local Bodies and Post Devolution Deficit Grants to states.
3. Assistance to SDRF: The central government also provides funds to State Disaster Relief Funds in addition to funding the National Disaster Management Authority (NDMA). The assistance to state government’s disaster relief authorities is provided as per the recommendations of the Finance Commission.
4. Post devolution revenue deficit grants: About a third of the total revenue collected by the Centre is directly transferred to states as their share in the divisible pool. However, the Finance Commission also provides a mechanism for compensation of any loss incurred by states, which is called post-devolution revenue deficit grants. This Finance Commission Grant forms the second largest chunk of Finance Commission transfers after the assistance to local rural bodies.
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