The 16th Finance Commission has allocated Rs 9,968 crore to Telangana for a five-year period from 2026-27 to 2030-31 for the development of rural infrastructure and civic amenities in gram panchayats, mandal parishads and zila parishads across the state.
According to a communication received by the state government from the Centre, the allocation is part of the Rs 4,35,236 crore recommended by the 16th Finance Commission for states during the five-year award period.
The allocation formula is based on 90 per cent weightage to the projected rural population as per 2026 estimates and 10 per cent weightage to geographical area. Based on this formula, Telangana, which accounts for 1.92 per cent of the rural population and 0.37 per cent of the country’s geographical area, has been allotted Rs 9,968 crore out of the total national grant pool.
The Centre also issued detailed guidelines regarding the utilisation, monitoring and transparency of these funds.
As per the guidelines, the grants are to be utilised by rural local bodies, including gram panchayats, mandal parishads and zila parishads, for infrastructure development, drinking water supply, sanitation, waste management, rural roads, street lighting and other public services.
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“The Centre clearly stated that the funds should not be used for payment of salaries or pensions,” a state government official said.
The Centre asked the state government to ensure transparency in expenditure and make utilisation details available to the public on a regular basis. The local bodies should submit quarterly and annual progress reports to the state government, which in turn will compile and forward comprehensive reports to the Centre, it said.
The guidelines further state that deficiencies identified during audits must be rectified immediately. In cases where irregularities or misuse of funds are detected, legal action should be initiated. The Centre also instructed the state government to issue necessary administrative orders regarding implementation of the guidelines.
The grants will be released annually in two equal instalments—the first in June and the second in October. To secure the first instalment of funds, the Telangana government must submit details of budgetary allocations made for panchayat raj and rural development, along with audit reports of the concerned local bodies for the 2025-26 financial year.
“The Centre will release the second instalment based on utilisation certificates and progress reports of the first tranche. The grants will be transferred directly to the state government’s account, and the funds must be passed on to the respective rural local bodies within 10 working days,” the official said.
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