The Fourteenth Finance Commission (FFC) was constituted by the President on January 2, 2013 to give recommendations on specified aspects of Centre-State fiscal relations during 2015-20. The Commission submitted its Report to the President on December 15, 2014.
The FFC was, inter-alia, mandated to recommend measures needed to augment the Consolidated Funds of the States to supplement the resources of the Panchayats and Municipalities based on the recommendations of the respective State Finance Commission (SFCs).
The FFC stipulates that a detailed procedure for the disbursal of the Performance Grant to Urban Local Bodies (ULBs) would have to be designed, subject to certain eligibility criteria. Under the 14FC, an amount of Rs. 87,143 crore are to be devolved towards the ULBs over a time period of five years, from 2015-2020. 80% of this amount forms the Basic Grant and 20% of the amount is the Performance Grant. These funds are only to be devolved for basic services and O&M purposes by ULBs.