Discuss the recommendations of the 13th Finance Commission which have been a departure from the previous commissions for strengthening the local government finances.

Linked to the divisible pool

Replacing static sums such as the 12th FC's ₹25,000 crore, the basic grant was 1.5% of the previous year's divisible pool, so local funds grew automatically with central tax buoyancy.

Performance grant

A tranche rising from 0.5% to 1% of the pool went only to states meeting conditions, with forfeited shares passed to complying states.

Special areas grant

Fifth and Sixth Schedule and other non-Part IX areas received a dedicated grant with its own performance tranche.

Audit and ombudsman

States had to give the CAG technical guidance over local audits, publish local body accounts with the budget and set up a local body ombudsman.

Urban service reforms

Municipalities needed property tax boards and service level benchmarks for water, sewerage, drainage and solid waste, with grants transferred electronically within five days.

Limits

Grants stayed small against need and many conditions were procedural, which is why the 14th and 15th Commissions refined performance grants.