Strengthening Urban Governance

Like the earlier Finance Commissions, the Sixteenth Finance Commission also recommended grants for local bodies. It proposed a substantial increase in local body grants - both in absolute and per capita terms over its predecessor. It recommended a grant of Rs. 7,91,493 crore for its award period 2026-31 which is about 116 percent higher than that recommended by FC-XV. The Commission allocated ₹3,56,257 crore for ULBs, reflecting an increased urban share of 45 percent to address rapid urbanization and rising service delivery costs. The paper examines the local grants focusing on grants for ULBs, the conditionalities associated to these grants and highlights issues related to some of the recommendations of the Commission. It finds that the recommendations of the Sixteenth Finance Commission represent a mix of timely and progressive interventions alongside notable gaps that fail to adequately address some critical structural concerns.

Commission · Crore · Local government · Per capita · Public finance · Urbanization · Indian Economic and Social Development · Local Government Finance and Decentralization · Urban and Rural Development Challenges