Jul 2025
Recommendations to the Sixteenth Finance Commission
The Sixteenth Finance Commission (2026-2031) of India, is a constitutional body established to recommend how financial resources are distributed between the Union and the States. The Commission also recommends grants-in-aid to states and local governments, including Urban Local Bodies (ULBs) and rural local bodies, to strengthen service delivery and fiscal stability.
The Sixteenth Finance Commission is a key opportunity to strengthen urban governance and service delivery by shaping fiscal transfers that support resilient infrastructure, institutional strengthening, and improved municipal finance systems.
The NFSSM Alliance submitted recommendations to the Sixteenth Finance Commission to strengthen urban water and sanitation service delivery, particularly in small and medium towns where ULBs face constraints in revenue generation, technical capacity, and institutional coordination.
The recommendations focus on two key priorities:
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Strengthening performance-based fiscal transfers by linking grants to measurable service outcomes in water and sanitation, supported by interoperable digital systems and transparent monitoring frameworks.
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Incentivising institutional and financial strengthening of ULBs, including flexible and performance-linked grants, and dedicated incentives for climate-resilient sanitation systems, innovation, and digital public infrastructure.
Overall, the recommendations position water and sanitation as a driver of urban transformation, enabling cities to build stronger institutional capacity, improve service delivery, and advance climate-resilient urban development.
Please download to access the detailed recommendations.