Telangana Panchayat Raj dept denies diverting 15th Finance Commission funds

Telangana’s Panchayat Raj and Rural Development department has categorically denied allegations that the state government misused funds allocated by the 15th Finance Commission for developmental projects. In a statement issued on Monday, July 20, 2026, the department clarified that the claims made by Union Minister of State for Home Affairs Bandi Sanjay were based on “factually incorrect” information. The ministry had accused the state of diverting grants intended for infrastructure and community development to cover electricity costs and staff salaries. The statement came in response to recent media reports citing the minister's remarks during a parliamentary session. According to the department, the 15th Finance Commission grants are specifically designed to support development initiatives outlined in the Eleventh Schedule of the Indian Constitution. These include the maintenance of public facilities such as drinking water supply systems, community assets, and even electricity distribution. The department emphasized that the funds are released directly to local bodies, Gram Panchayats, Mandal Praja Parishads, and Zilla Praja Parishads, to ensure transparency and accountability in their usage. Commissioner of the Panchayat Raj and Rural Development department, D. Divya, explained that under Section 52 of the Telangana Panchayat Raj Act, 2018, the maintenance of streetlights falls under the statutory responsibilities of Gram Panchayats. She noted that paying electricity charges for street lighting is considered a priority obligation for these local bodies. This clarification aims to address concerns raised over the allocation of funds for essential services versus development activities. The department further highlighted that the tied component of the 15th Finance Commission grants is designated for specific purposes, including the upkeep of drinking water supply systems. Meanwhile, the untied portion allows for greater flexibility, enabling local authorities to allocate resources across the 29 subjects listed in the Eleventh Schedule. This includes areas such as sanitation, education, and health, underscoring the multifaceted nature of the grants. It was also stated that the state government does not interfere with how these funds are spent once they reach the grassroots level. Instead, the focus is on ensuring that local representatives have the autonomy to manage resources according to the needs of their communities. The release of funds directly to panchayats is intended to streamline administrative processes and reduce bureaucratic delays. The denial comes amid ongoing scrutiny of financial management practices in several states, particularly regarding the use of central grants for non-development purposes. While the Telangana government maintains its position, the controversy highlights broader challenges in monitoring the implementation of centrally sanctioned funds at the local level. Independent audits and oversight mechanisms remain crucial to maintaining public trust in the integrity of such programs. As the situation unfolds, officials from both the state and central governments are likely to engage in further dialogue to resolve discrepancies in reporting. The outcome of this dispute could influence future policy decisions related to the allocation and supervision of developmental grants, reinforcing the need for clear guidelines and transparent communication between all stakeholders involved.