One of the prominent features of Kerala’s decentralisation is the formula- based, non-discretionary, and equitable devolution of untied funds. Un-tied funds are devolved to the Local Governments in three streams viz; (i) General Purpose Fund for meeting the expenditure on traditional functions and establishment expenses, (ii) Maintenance Fund for the maintenance of assets of Local Governments including those transferred as part of decentralization, and (iii) Development Fund (Plan allocation) for meeting the development expenditures. The State transfers 4.0 per cent of its Own Tax Revenue (SOTR) as General Purpose Fund and 6.5 per cent of Own Tax Revenue as Maintenance Fund. A portion of State’s Plan outlay (28.09 per cent in 2024-25) is devolved as Development Fund every year. Formula based devolution ensured funds have reached to every corner of the State and more to the backward areas. The transfer of resources as stated has ensured that adequate funds reach all areas thereby giving a boost to local area development and improving the lives of people. The Local Governments have absolute freedom in formulating and implementing projects based on their priorities subject to plan guidelines issued by the State Government from time to time.