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Monday, February 2, 2026

Action Taken on the Recommendations Made by the Sixteenth Finance Commission

GOVERNMENT OF INDIA

Explanatory Memorandum as to the Action Taken
on the Recommendations Made by the
Sixteenth Finance Commission

February, 2026

MINISTRY OF FINANCE
BUDGET DIVISION

EXPLANATORY MEMORANDUM AS TO THE ACTION TAKEN ON THE RECOMMENDATIONS MADE BY THE SIXTEENTH FINANCE COMMISSION IN ITS REPORT SUBMITTED TOTHE PRESIDENT ON NOVEMBER 17, 2025.
  1. The Sixteenth Finance Commission (XVI-FC) [Commission, henceforth] was constituted on December 31, 2023, by the President, vide Order number S.O. 5533(E) dated December 31, 2023, along with the Terms of Reference. The Commission was required to submit its report by October 31, 2025. The term of the Commission was extended by one month vide Order number S.O. 4640(E) dated October 10, 2025 permitting the Commission to submit its report by November 30, 2025. The Commission submitted its report to the President on November 17, 2025.
  2. The Report of the Commission covering the financial years 2026-27 to 2030-31 commencing from April 1, 2026, together with this Explanatory Memorandum as to the action taken on the recommendations of the Commission, is being laid on the Table of the House, in pursuance of Article 281 of the Constitution. Summary of the main recommendations related to sharing of the Net proceeds of Union taxes between the Centre and the States, grants-inaid of revenue of States under Article 275(1) of the Constitution, financing of disaster management expenditure, grants to local bodies and other recommendations are contained in this Memorandum. This Memorandum also contains the recommendations related to Path to Macro and Fiscal Stability, Reforms in Power Sector, Containing and Making Subsidies Efficient and Public Sector Enterprise Reforms as contained in the Report submitted by the Commission.

    Sharing of Tax Revenues: Vertical Devolution

  3. The Commission has recommended to retain the States’ share at 41 per cent of the net proceeds (divisible pool) of Union taxes.
  4. The Commission has recommended that to bring in more transparency about the divisible pool and the actual devolution every year, the Union Government disclose the data pertaining to net proceeds as certified by CAG under Article 279.

    The Government has accepted the above recommendations of the Commission.

    Sharing of Tax Revenues: Horizontal Devolution

  5. The Commission has determined the inter se share of States, based on population, demographic performance, area, forest, per‑capita‑income‑distance and contribution of the State to Gross Domestic Product (GDP) as criteria. The formula for horizontal devolution and weights assigned to various criteria as recommended by the Commission are given in Table 8.8 of the Report. The shares of States in horizontal devolution for the award period are given in Table 8.9 of the Report.

    The Government has accepted the above recommendations of the Commission.

    Assessment of State Finances and Grants-in-aid of Revenues of States

  6. The Commission has not recommended revenue deficit grants to States. The Commission has not recommended any sector‑specific or State‑specific grants. The Commission has observed that State finances in general, and that of tax revenues, committed expenditure and discretionary expenditures in particular shows that there is significant scope of increasing revenues and rationalising expenditure.

    The Government takes note of the above assessment of the Commission.

    Local Body Grants

  7. The Commission has recommended that the grants for Rural Local Bodies (RLBs) be classified into basic and performance components and the grants for Urban Local Bodies (ULBs) be classified into basic, performance, special infrastructure and urbanisation premium components. The aggregate national grant allocation for basic and performance components, put together has been divided in the ratio of 60:40 between RLBs and ULBs. The Commission has recommended that the division between basic and performance components be divided in the ratio of 80:20 for both RLBs and ULBs.
  8. The Commission has recommended total grants for duly constituted Rural Local Bodies (RLBs) and Urban Local Bodies (ULBs) of ₹ 7,91,493 crore for the period 2026-27 to 2030-31. The Commission has determined the inter-se distribution of grants to RLBs among the states based on a 90:10 ratio of projected rural population (2026) and area. For ULBs, the inter-se States' distribution has been determined by a 90:10 ratio of projected urban population (2026) and the Own Source of Revenue (OSR) of ULBs, respectively.
  9. The Commission has recommended that concerned State Government shall make allocations for exempted areas on par with the Commission’s recommendations with respect to local bodies.
  10. The Commission has recommended three entry-level conditions for eligibility of States to claim local body grants. Firstly, there should be a duly constituted body in place as required in Part IX and Part IX-A of the Constitution. Secondly, online availability in public domain in year T, provisional accounts of all RLBs and ULBs of the State for the fiscal year T-1 and audited accounts for the fiscal year T-2. Thirdly, the Commission recommended that States should comply with the Constitutional provisions pertaining to the regular constitution of State Finance Commission (SFC) on the expiry of five years from the formation of the previous SFC and ensure laying of the Action Taken Report (ATR) in the State Legislature within 6 months of submission of the SFC report.
  11. The Commission has recommended that the local body grants for both RLBs and ULBs be divided into basic (80 per cent) and performance (20 per cent) components, with the latter divided into two equal halves (i) RLB/ULB performance component and (ii) State performance component. The Commission has recommended that the basic component be made available to the States upon fulfilment of the three entry-level (eligibility conditions).
  12. The recommendations of the Commission on the eligibility for Gram Panchayats, Block Panchayats, District Panchayats, ULBs to receive Performance Components are detailed in paras 10.97,10.98 and 10.99 of Volume I of the Report. The Commission has recommended the conditions for release of the State Performance Component at para 10.100 of Volume I of the Report. The Commission’s recommendations on the methodology for disbursing the undisbursed portions of a State’s local body performance grants in case of unfulfilled performance conditionalities are provided at para 10.101 of Volume I of the Report.
  13. The Commission has recommended that 50 per cent of the basic component should be tied and the remaining 50 per cent of the basic component and the entire performance components should remain untied. The tied component should be directed towards ‘Sanitation and Solid Waste Management’ and/or ‘Water Management’.
  14. The Commission recommended that no local body should be allowed to spend more than 20 per cent of the untied allocation on the construction and maintenance of roads. Additionally, it recommended that the untied grants should not be used for the payment of salaries or other establishment‑related expenditure.
  15. The Commission recommended that the total quantum of urbanisation premium, for incentivising rural to urban transitions, to be ₹10,000 crore for the complete award period with a fixed per capita one‑time eligibility amount to be ₹2,000 per person (based on Census 2011 population). The Commission recommended that the release of urbanization premium component be claimed by the State on mergers of peri‑urban villages into adjoining larger ULB with existing population not less than One lakh and formulation of an appropriate Rural to Urban transition policy.
  16. The Commission recommended a Special Infrastructure Component for selected ULBs with the outlay of ₹56,100 crore to facilitate decisive intervention in comprehensive wastewater management in urban growth centres. The details including eligibility of ULBs for these grants are contained in paras 10.115-10.120 of Volume I of the Report.
  17. The Commission recommended that Local Body Grants shall continue to be released in minimum two equal instalments each year, consistent with the existing practice and subject to the fulfilment of the conditions stipulated by the Commission. The Commission further recommended that the Union Government should ensure that where a set of local bodies within the State meet the conditions, the grants due to them are released without waiting for the rest.
  18. The Commission recommended that State Governments should ensure the transfer of the grants‑in‑aid to their respective local bodies within ten working days of their receipt from the Union Government. Any delay in this transfer beyond the stipulated ten working days shall obligate the State Governments to release the funds along with interest, calculated at the effective rate of interest applicable to market borrowings/State Development Loans for the preceding financial year. The Commission recommended that no further conditions be imposed either by the Union Government or the State Government for release of local body grants other than those explicitly indicated in the Chapter on Local Body Grants of the Report.
  19. The detailed recommendations of the Commission related to local bodies grants are contained in Chapter 10 of Volume I of the Report.

    The Government has accepted the above recommendations of the Commission.

    Financing of Disaster Management

  20. The Commission has recommended a total corpus of ₹2,04,401 crore for State Disaster Response Fund (SDRF) and State Disaster Mitigation Fund (SDMF) together, for the award period from 2026‑27 to 2030‑31. The State‑wise allocations recommended by the Commission may be seen in Annexures 11.3 and 11.4 of Volume II of the Report. The Union share in the above corpus is ₹1,55,915.85 crore and the States’ share is ₹48,485.15 crore. The Commission has recommended the cost sharing ratio between the Union and State Governments of 75:25 for Non- Northeastern and Hilly (non‑NEH) states and 90:10 for Northeastern and Hilly (NEH) States.
  21. The Commission has recommended the corpus should be divided between the SDRF and SDMF in the ratio of 80:20.The Commission recommended an SDRF allocation of ₹1,63,521 crore and SDMF allocation of ₹40,880 crore. The Commission recommended that there be flexibility for reallocation between Response and Relief and Recovery and Reconstruction within SDRF. Preparedness and Capacity Building has been recommended to be covered under SDMF and National Disaster Mitigation Fund (NDMF).
  22. The Commission has recommended that the accumulating balance under SDRF should be limited to the extent that if the unspent balance under SDRF exceeds the sum of past three years annual allocation of SDRF, further releases may be temporarily withheld. The funds withheld will be released if the States’ balances reduce below the threshold of past three years annual allocation.
  23. The Commission has recommended a total allocation of ₹79,406 crore for award period 2026-27 to 2030-31 based upon past expenditures for disaster management at the national level for National Disaster Response Fund (NDRF) and National Disaster Mitigation Fund (NDMF). The Commission has recommended the graded cost sharing of central assistance through the NDRF (except Response and Relief) and NDMF should be maintained. The Commission recommended that States are to contribute 10 per cent for assistance up to ₹250 crore, 20 per cent for assistance up to ₹500 crore and 25 per cent for all assistance exceeding ₹500 crore. However, NEH States, the Commission recommended, should contribute 10 per cent of central assistance under NDRF and NDMF.
  24. The Commission has recommended that the complete feeding and validation of data in National Disaster Management Information System (NDMIS) portal (for a Financial Year by the May 31 of the succeeding year) will be a necessary condition for States to avail the Disaster Management Grant from the second year of the award period, that is 2027‑28.
  25. The detailed recommendations of the Commission related to Financing Disaster Management are contained in Chapter 11 of Volume I of the Report.

    The Government has accepted the above recommendations of the Commission.

    Path to Macro and Fiscal Stability

  26. The Commission has recommended that States’ fiscal deficit should be capped at 3 per cent of their respective GSDP (excluding loans under SASCI) and to ensure the stability of the debts of the State Government, this should be strictly enforced in accordance with clause (3) of Article 293 of the Constitution. The Union Government should reduce its fiscal deficit to 3.5 per cent of GDP by the end of the award period. The Commission has recommended that States should completely discontinue the practice of incurring off-budget borrowings bringing all such borrowings on their budgets. It has suggested a format for reporting off-budget borrowings of States and recommended that lending institutions should provide an alternative source of data to strengthen the reporting framework for off-budget borrowing. The Commission has recommended that Fiscal Responsibility Legislation (FRL) framework of the States be amended to bring uniformity and remove inconsistencies and align them with the fiscal consolidation roadmap of the Commission.

    The Government accepts in-principle, the recommendation of the quantum (expressed as a per cent of GSDP) of net borrowing ceilings for the States. Other recommendations of the Commission including those related to Off-Budget Borrowings, amendment to State FRLs, Union Government Fiscal Deficit will be examined separately.

    Other recommendations

  27. In addition to the above, the Commission has made other recommendations including those on rationalizing the structure of Centrally Sponsored Schemes (Para 6.41 of the Volume I of the Report), Reforms in the Power Sector (Chapter 13 of Volume I), Containing and Making Subsidies Efficient (Chapter 14 of Volume I), Public Sector Enterprise Reforms (Chapter 15 of Volume I) etc.

    The Government will examine these recommendations of the Commission in due course.

    Implementation

  28. Orders on the accepted recommendations under Article 270 of the Constitution relating to share in Union Taxes and duties, grant to local bodies and financing of disaster management will be issued after obtaining the approval of the President. The recommendations related to Path to Macro and Fiscal Stability, Power Sector, Containing and Making Subsidies Efficient, Public Sector Enterprise Reforms, etc. and other recommendations of the Commission will be acted upon in due course.



New Delhi
NIRMALA SITHARAMAN

February 01, 2026
Minister of Finance

Friday, November 28, 2025

Reservation of seats of Sarpanch & members in Telangana

GOVERNMENT OF TELANGANA
ABSTRACT

PR&RD Department — Elections — Elections to Gram Panchayats under Telangana Panchayat Raj Act, 2018 as amended — Compæhensive Guidelines on reservations in supersession of earlier orders — Regarding.

PANCHAYAT RAJ AND RURAL DEVELOPMENT (MZAD) DEPARTMENT

G.O.Ms. No.46
Dated: 22.11.2025.

Read the following:


  1. G.O.Ms No.42, PR&RD, (MZAD) Department, dated 26-09-2025.
  2. Hon' ble Supreme Court Judgment in W.P (Civil) No.980 of 2019.
  3. G.O Ms.No.49, dt.04-I I -2024 of the Backward ClassesWeIfare (B) Department, Government of Telangana.
  4. Telangana Panchayat Raj Act 2 of2025, dt.04-Ol -2025.
  5. Dedicated Commission report, dt.20.l I .2025.
  6. From the Director, PR&RE, Hyderabad, Lr.N0.CPRRE-G2/ELEC/7/2025-GSection, dt:21.11.2025.


ORDER:

In the reference 6th read above, the Director Panchayat Raj & Rural Employment Hyderabad, has proposed comprehensive guidelines on reservations in Gram Panchayat elections and requested the Government to take necessary action.

2. In the reference 2ndread above, the Hon 'ble Supreme Court issued orders:
  1. To set-up a dedicated Commission to conduct contemporaneous rigorous empirical inquiry in to the nature and implications of the backwardness quota in Gram Panchayats, within the State.
  2. To specify the proportion of reservation required to be provisioned Gram Panchayat wise in light of recommendations of the Commission, so as not fall foul of over breadth.
  3. In any case such reservation shall not exceed aggregate of 50 percent ofthe total seats reserved in favour of SCs/STs/OBCs taken together.
3. Accordingly, a Dedicated Commission was appointed by the Government vide reference 3 rd read above.

4. In the reference 4th read above, the Section 9, Section 1 7, Section 146, Section 147, Section 175 and Section 176 were amended to make reservations as per the recommendations of the Dedicated Commission.

5. In the reference 5 th read above, the Dedicated Commission has submitted its report recommending number of Ward Members and Sarpanches to be reserved to Scheduled Tribes, Scheduled Castes and Backward Classes.

6. As per Telangana Panchayat Raj Act 2018 as amended vide reference 4th read above, the reservation of seats/offices shall be by rotation commencing from the first ordinary elections held under the act. Ensuing elections shall be treated as second ordinary elections under the Act.

However Elections to those Gram Panchayats/wards which were notified newly after 2019 elections shall be treated as first ordinary elections under the Act. While making reservations to such new Sarpanches / Ward Members any reservations made in earlier elections shall be ignored and shall be treated as afresh.

7. In view of the above and in supersession of the earlier guidelines issued in the GO. I st read above, the following guidelines/procedure for fixation of reservations to Sarpanch & Ward Member are issued for the ensuing Gram Panchayat Elections.

Contd. Page. 2
Pages: 1 2 3 4

Wednesday, November 12, 2025

Telangana State Scheduled Castes and Scheduled Tribes Special Development Fund

THE TELANGANA STATE SCHEDULED CASTES AND SCHEDULED TRIBES SPECIAL DEVELOPMENT FUND
(PLANNING, ALLOCATION AND UTILIZATION OF FINANCIAL RESOURCES) ACT, 2017.
(ACT NO. 18 OF 2017)
ARRANGEMENT OF SECTIONS

Sections

CHAPTER - I
PRELIMINARY
  1. Short title, extent and commencement.
  2. Definitions.
    CHAPTER - II
    PLANNING, RESOURCE ALLOCATION AND SCHEMES FOR SCHEDULED CASTES SPECIAL DEVELOPMENT FUND AND SCHEDULED TRIBES SPECIAL DEVELOPMENT FUND
  3. Earmarking of Scheduled Castes Special Development Fund/Scheduled Tribes Special Development Fund from Pragathipaddu outlays.
  4. Communication of provisional outlay earmarked as Scheduled Castes Special Development Fund/ Scheduled Tribes Special Development Fund to the Departments.
  5. Schemes to be included under the Scheduled Castes Special Development Fund/ Scheduled Tribes Special Development Fund.
  6. Promotion of equity among Scheduled Castes and Scheduled Tribes.
  7. Obligation to cover Scheduled Castes/ Scheduled Tribes in general schemes.2 [Act No. 18 of 2017
  8. Formulation of schemes for Scheduled Castes Special Development Fund/ Scheduled Tribes Special Development Fund.
  9. Submission of Schemes to be included in each year in the Special Development Fund for appraisal.
  10. CHAPTER - III
    APPRAISAL, ALLOCATION AND APPROVAL OF SCHEMES UNDER SCHEDULED CASTES SPECIAL DEVELOPMENT FUND AND SCHEDULED TRIBES SPECIAL DEVELOPMENT FUND.
  11. Appraisal of the SCSDF and STSDF Schemes by the Nodal Agency.
  12. Allocation of Scheduled Castes Special Development Fund and Scheduled Tribes Special Development Fund for financing the SCSDF/STSDF schemes included in the Special Development Funds.
  13. Recommendation by the Nodal Agencies and Nodal Department.
    CHAPTER - IV
    BUDGET PROVISIONING, DISTRIBUTION AND STRENGTHENING OF IMPLEMENTATION MACHINERY
  14. Budget allocations.
  15. Unspent amount to be compensated.
  16. Scheduled Castes Special Development Fund and Scheduled Tribes Special Development Fund wing in Finance Department.
  17. Budget Release Orders.
    CHAPTER - V
    INSTITUTIONAL ARRANGEMENTS
  18. State Council for Development of Scheduled Castes/ Scheduled Tribes.
  19. Functions of the State Council.
  20. Nodal Agency and Nodal Department.
  21. Functions of Nodal Agency and Nodal Department.
  22. Administrative and technical support to Nodal Department for SCSDF & STSDF.
  23. Department level Special Development Fund Support Unit.
  24. Implementation of Scheduled Castes Special Development Fund/ Scheduled Tribes Special Development Fund schemes in the district.
  25. Institutional strengthening for effective implementation and monitoring.
    CHAPTER - VI
    TRANSPARENCY AND ACCOUNTABILITY IN THE IMPLEMENTATION OF SCHEDULED CASTES SPECIAL DEVELOPMENT FUND/SCHEDULED TRIBES SPECIAL DEVELOPLMENT FUND SCHEMES
  26. Transparency and accountability.
  27. Incentives and penalities.
  28. Annual Report to be placed before State Legislature.
  29. Power to make rules.
  30. Power to remove difficulties.
  31. Repeal and savings.

Contd.Page. 2.

Pages: 1 2 3 4 5 6 7 8 9

Sunday, September 7, 2025

Central Finance Commissions since Independance

Finance CommissionYear of EstablishmentChairmanOperational Duration
First1951K.C.Neyogi1952-57
Second1956K. Santhanam1957-62
Third1960A.K. Chanda1962-66
Fourth1964P.V. Rajamannar1966-69
Fifth1968Mahaveer Tyagi1969-74
Sixth1972K. Brahmananda Reddy1974-79
Seventh1977J.M. Shelat1979-84
Eighth1983Y.B. Chavan1984-89
Ninth1987N.K.P. Salve1989-95
Tenth1992K.C.Panth1995-20
Eleventh1998A.M. Khusro2000-05
Twelfth2002C. Rangarajan2005-10
Thirteenth2007Dr. Vijay L.Kelkar2010-15
Fourteenth2013Dr.Y.V. Reddy2015-20
Fifteenth2017N.K. Singh2020-26
Sixteenth2023Dr. Arvind Panagariya2026-31


Wednesday, September 3, 2025

Payment of HRA and CCA while on Leave of all kinds

GOVERNMENT OF ANDHRA PRADESH
ABSTRACT

ALLOWANCES – Recommendations of PRC 2010 – Payment of HRA and CCA while on Leave of all kinds in respect of State Government Employees – Orders – Issued.

--------------------------------------------------------------------------------------------------
FINANCE (FR.I) DEPARTMENT
G.O. Ms. No. 28
Dt. 09-03-2011

Read the following:

  1. G.O.Ms.No.438, G.A. (Spl.A) Dept., dt. 7-7-2008.
  2. G.O.Ms.No.153, Finance (FR.I) Dept., dt. 4-5-2010

***
O R D E R:


In the Government Order 1st read above, orders were issued constituting Ninth Pay Revision Commission and government appointed Sri C.S. Rao, IAS, (Retd.), as Pay Revision Commissioner.

2.  The Ninth Pay Revision Commission submitted its report to the Government on 5-122009 and recommended, inter alia that, “as in the case of regulation of D.A. while on leave, the payment of H.R.A. & C.C.A. may also be allowed to State Govt. employees as applicable to the employees of Govt. of India. The Commission therefore recommends the payment of H.R.A./C.C.A. upto 180 days during leave of all kinds in the normal course.

3.  In the Government order 2nd read above, it was ordered that the maximum earned leave that may be granted at a time to a government servant in superior service is enhanced from 120 days to 180 days on par with the employees of the Govt. of India.

4.  After careful examination of the report, Government decided to accept the recommendations of the Pay revision Commissioner and hereby order that, the payment of HRA and CCA shall be allowed to State Govt. employees upto 180 days during leave of all kinds.

5.  These orders will come into force with immediate effect.

6.  This G.O. is available on Internet and can be accessed at the address http://www.ap.gov.in/goir and http://www.apfinance.gov.in.

(BY ORDER AND IN THE NAME OF THE GOVERNOR OF ANDHRA PRADESH)


L.V. SUBRAHMANYAM
PRL. SECRETARY TO GOVERNMENT (FP)


To
All Departments of Secretariat (10 copies each)
The accountant General, A.P., Hyderabad (20 copies)
The accountant General, A.P., Hyderabad (by name) The Pay and Accounts Officer, Hyderabad The Secretary to Governor, A.P., Hyderabad.
All Secretaries to Government.
The Private secretary to the chief Minister and Private Secretaries to all Ministers.
All the Heads of Departments (including Collectors and District Judges0 The registrar, High court of Andhra Pradesh, Hyderabad (with covering letters) All the District Treasury officers.
The secretary, A.P. GENCO/TRANSCO.
The General Manager, A.P. State Road Transport Corporation, Hyderabad (with covering letter) All District Educational Officers.
All district Panchayat Officers.
All secretaries of Zilla Grandhalaya Samsthas through the Director of Public Libraries, Hyderabad.
All Secretaries of Agricultural Market Committees through Director of Marketing, A.P., Hyderabad.
All Commissioners/Special Officers of Municipalities.
All Recognized Service Associations.
The Director, Government Central Press, A.P., Hyderabad for publication in the A.P. gazette.
Copy to the General administration (Cabinet) Department.
Copy to the General administration (SW) Dept.
Copy to SF/SCs.



// Forwarded :: By Order //

SECTION OFFICER.


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