Hyderabad allotted 16th Finance Commission $9,968 crore to Telangana for the five-year period from 2026-27 to 2030-31 for development of rural infrastructure and civic amenities in gram panchayats, mandal dioceses and zilla dioceses across the state, people familiar with the development said on Monday.
According to a communication received by the state government from the Centre, the allocation is part of $4,35,236 crore recommended by the 16th Finance Commission for states across the country over the award period of five years.
The allocation formula is based on a 90% weight for the projected rural population estimated in 2026 and a 10% weight for the geographical area. Based on this formula, Telangana, which represents 1.92% of the rural population and 0.37% of the geographical area of the country, was allocated. $9,968 crore of total national grants.
The Center also issued detailed guidelines on the use, monitoring and transparency of these funds.
As per the guidelines, the grants will be used by rural local bodies, including gram panchayats, mandal parishes and zilla parishes, for infrastructure development, drinking water supply, sanitation, waste management, rural roads, street lighting and other public services.
“The Center has clearly stated that the money should not be used to pay salaries or pensions,” a state government official said.
The Center has asked the state government to ensure transparency in expenditure and make usage details available to the public on a regular basis. He added that local bodies must submit quarterly and annual progress reports to the state government, which in turn will compile comprehensive reports and send them to the Centre.
The guidelines further stipulate that deficiencies identified during audits must be corrected immediately. In cases where irregularities or misuse of funds are discovered, legal action should be initiated. The Center has also instructed the state government to issue necessary administrative orders regarding implementation of the guidelines.
The grants will be issued annually in two equal batches – the first in June and the second in October. To secure the first tranche of funds, the Telangana government must submit details of budget allocations for panchayat raj and rural development, along with audit reports of the local bodies concerned for the financial year 2025-26.
“The Center will issue the second tranche based on the utilization certificates and progress reports of the first tranche. The grants will be transferred directly to the state government account and the funds must be transferred to the rural local bodies concerned within 10 working days,” the above-mentioned official added.
