Thirteenth Finance Commission ( 13th FC) recommendations relating to urban local bodies inter alia aim at strengthening
municipal finances and urban governance in India. The 13th FC, making a departure from the previous Finance Commissions, divided the grants to be distributed to the states for local bodies into two parts -
general basic grant and general performance grant. The performance grant can be accessed only if the state
complies with nine conditions, which in other words can be called reforms. They
States are given one year
i.e., 2010-2011 to comply with these conditions before they can access the performance grant from 2011-2012. Complying with these conditions within the stipulated timeframe, require comprehensive understanding and capacity at the State
and ULB level.