The Third State Finance Commission, West Bengal (constituted by the Government Order No. 4000-F.B. dated 22nd 2006) recommends for an ‘untied’ fund allocation to the tune of Rs. 800 crore constituting around 5% of the State’s own net tax revenue to the Local Self Governments, both rural and urban, of the State . The commission also recommends a progressive increase of the ‘untied’ fund allocation at the minimum rate of 12% per annum on a cumulative basis for the subsequent four financial years and splitting of the total ‘untied’ fund allocation at the State level into two segments – 24% for Urban Local Bodies and 76% for Panchayati Raj Institutions. Consequent upon the recommendation of the Third State Finance Commission the Governor is pleased, in exercise of the power conferred by section 212 read with sub-section (2) of section 207B of the West Bengal Panchayat Act, 1973 (West Ben. Act XLI of 1973), to lay down procedure for entitlement and allocation of grants under ‘untied’ fund and utilization of the said fund by the Zilla Parishads, Panchayat Samitis and Gram Panchayats in the following manner.

1. Entitlement of fund shall be guided by the recommendations of the Third State Finance Commission, West Bengal (constituted under Notification No.4000-FB dated 22nd February, 2006) and subsequent Action Taken Report of the Government of West Bengal.
2. Grants under Third S.F.C. will be divided into two segments- 98% and 02%. (a) Fund under first segment (98%) will be termed as Bangla Gram Bikash Prakalpa. (b) Fund under second segment (02%) will be allotted among PRIs of all tiers as Incentive Grant in proportion to the ‘Own Source Revenue’ collected by PRI body in excess of the collection of the last year. This incentive grant will henceforth be termed as Panchayat Sampad Bikash Prakalpa.
3. (a) Fund under Bangla Gram Bikash Prakalpa will be allocated to the Zilla Parishads, Panchayat Samitis and Gram Panchayats in the ratio of 12 : 18 : 70. All Zilla Parishads taken together will be allocated 12% of the fund. All Panchayat Samitis will get 18% and all Gram Panchayats taken together will get 70% of this Untied Fund. Criteria for allocation to PR bodies within any tier will be guided by the formula given with the order.

3. (b) Modus Operandi of Panchayat Sampad Bikas Prakalpa will be notified in due course
4. Entitlement of fund Bangla Gram Bikash Prakalpa to any PR body will depend 50% on its population as per Census 2001. Remaining 50% of allocation will be guided by other indicators like – 1) Backward population segment, 2) Female non-literate, 3) Food insecurity 4) Marginal workers 5) Total population without drinking water or paved approach or power supply, 6) Sparseness of population (inverse of population density), 7) Backwardness reflected by HDI. Different weightage has been assigned to these indicators for different tiers of PRIs details of which are given in the table below. For backward population segment – SC, ST and minority population has been given weightage in the ratio of 1: 2: 1.