The Ministry of Finance has released Rs 5005.25 crore as first installment of untied basic grants 'in advance' for non-million-plus (cities with less than one million population) cities to 28 states of the country. This would provide the states with vital financial resources at a time when the country is facing the coronavirus crisis.
The Ministry of Finance has released Rs 5005.25 cr as 1st installment of untied basic grants ‘in advance’ for Non-Million-plus cities to 28 states, pending finalisation of the operational guidelines. This would provide the states with vital financial resources at a critical time. pic.twitter.com/OCGvvNHirW— NSitharamanOffice (@nsitharamanoffc) May 20, 2020
As recommended by the 15th Finance Commission, the state finance departments will transfer the grants-in-aid directly to all urban local bodies in 10 working days of receipt from the Centre without any deduction. "States while allocating these grants to urban local bodies in non-million plus cities should also make allotment of grants on a population basis for cantonment boards within their territories as per FC-15 report for FY21. "For ULBs other than million-plus cities, the grants should be distributed to all ULBs as per the state finance commission recommendation," a notification by Bhartendu Kumar Singh, Finance Commission Division, Ministry of Finance, stated.
In case of delay, states will need to release the same amount with interest as per the effective rate of interest on market borrowings or state department loans for the previous year. The basic grants are untied and can be used by local bodies for location-specific needs, except for salary or other expenditure. The finance ministry said this time the grant has been released in advance, while the subsequent grants will be released per the provisions in the operational guidelines.
Meanwhile, the Union Cabinet chaired by Prime Minister Narendra Modi on Wednesday approved a series of measures announced in the government's fiscal stimulus package worth Rs 20 lakh crore. Among the key proposed approved today include additional funding of up to Rs 3 lakh crore to MSMEs and MUDRA borrowers, a special liquidity scheme for non-banking financial companies and housing finance companies, allocation of foodgrains to migrants, adoption of auction methodology of coal and lignite mines, and a formalisation scheme worth Rs 10,000 crore the unorganised sector's micro food processing enterprises.