Gurgaon: Haryana’s urban local bodies are facing mounting pressure to clear a massive backlog of utilisation certificates (UC) amounting to more than Rs 4,400 crore.A UC is a document that provides verifiable proof that funds, grants or subsidies have been used exactly for their intended purpose — a mandatory compliance requirement for (further) grants.The directorate of urban local bodies (ULB) has warned municipalities to expedite compliance with conditions linked to the release of grants under the 16th Finance Commission. Under the 16th Finance Commission, the municipalities of Haryana will get Rs 7,834 crore in grants for the period from FY 2026-27 to FY 2030-31.The ULB records show that UC pendency under the 16th Finance Commission for the period from 2020-21 to 2025-26 stands at Rs 1,379.8 crore. The amount relates to 1,009 pending utilisation certificates across municipalities.The situation is even more severe for grants outside the Central Finance Commission (CFC) framework. Pending utilisation certificates for other grants covering the period from 2012-13 to 2025-26 amount to Rs 3,066.1 crore and involve 1,722 certificates that remain unsettled. Together, the two categories account for Rs 4,445.9 crore in pending utilisation certificates spread across 2,731 cases, highlighting a major compliance challenge for urban local bodies in the state.Grants — outside the CFC framework — mean all those received by municipalities from sources other than CFC. These could include grants from the state govt, centrally sponsored schemes, urban development missions, special-purpose grants or other departmental funding programmes.The ULB department has issued multiple advisories and letters to municipalities seeking submission of the pending certificates and has directed them to furnish them at the earliest. Officials warned that compliance with Finance Commission conditions is critical as non-compliance can affect the release of grants.The issue was reviewed as part of a broader assessment of municipalities’ preparedness to meet mandatory conditions prescribed under the 16th Finance Commission for the award period beginning in 2026-27. The Centre has allocated grants to municipalities under the 16th FC from 2026-27 to 2030-31, but access to the funds is contingent on meeting several entry-level financial and accounting requirements.For the municipalities in Gurgaon, a senior MCG official told TOI, “We have 100% compliance and we have already submitted all our utilisation certificates. The issue was discussed at a meeting held recently and the municipalities were directed to submit UCs since the compliance is required for the 16th Finance Commission.”The review also covered implementation of the Fund Disbursal Management System (FDMS), introduced in Oct 2025 to monitor State Finance Commission grants. The directorate said around Rs 650 crore has been spent through the FDMS up to April 30, 2026, while Rs 984 crore remains available for admissible expenditure.The review highlighted a key eligibility condition to avail the grants under the Finance Commission’s municipal performance component. To qualify, municipalities must achieve a minimum annual increase of 10% in own-source revenue compared with the previous financial year. Urban local bodies have been asked to prepare and submit revenue enhancement plans to the ULB department, backed by action plans demonstrating how they intend to meet the prescribed growth target.
