Centre clears Rs 2,500 crore for Telangana panchayats; Uncertainty clouds pending bills

The Union government has approved the release of Rs 2,500 crore in 15th Finance Commission funds for Telangana’s gram panchayats after a two-year gap. However, uncertainty persists over whether the money will fund new works or clear long-pending dues.

Hyderabad: The union government has approved release of Rs 2,500 crore in 15th Finance Commission funds, bringing much-needed relief to financially strained gram panchayats in the State. However, uncertainty continues on whether these funds would be used for new works or to settle pending bills amounting to around Rs.900 crore, owed to former sarpanches and panchayat secretaries.

The Centre has informed the State that Rs 1,000 crore will be released by the end of this month and the remaining Rs 1,500 crore next month. The funds were withheld for nearly two years as Telangana had no elected panchayat bodies after their term expired in January 2024.

---

With elections held last month and new governing bodies in place, the Union government has cleared the way for fund release, but with strict procedural guidelines including separate bank accounts, Public Financial Management System (PFMS) registration, digital signatures of sarpanch and deputy sarpanch, and mandatory e-procurement for works.

However, the release of funds does not automatically resolve the prevailing crisis at the village level over the past two years. With funds frozen both at the Centre and by the State government, village administration collapsed in many areas. Diesel bills went unpaid, sanitation faltered and secretaries stopped salaries to support staff. Many sarpanches spent from their own pockets, borrowing heavily to keep essential works running.

Across districts, pending dues to former sarpanches and also special officers/village secretaries were estimated at around Rs 1,083 crore. Though the State government released around Rs 140 crore, interest on private loans has accumulated, pushing some leaders into severe distress. Across the State, nearly a dozen sarpanches died by suicide reportedly due to financial pressure.

During the panchayat election campaign, the Congress leaders promised immediate clearance of these bills. But despite assurances to settle dues by March 31, no funds have been released, prompting rising frustration among former sarpanches and secretaries.

With the new panchayat bodies just assuming office, they now face a dilemma on whether to use the incoming Central funds for fresh development or divert them to repay old debts. Officials pointed out that the 15th Finance Commission funds must be utilised for payment of works carried out previously, but admitted that the newly elected bodies were also putting pressure for funds to take up various works.

In addition to the Central funds, the State government is expected to release matching grants. Whether this infusion will stabilise rural governance or ignite fresh conflict remains to be seen.