In its submission, the Commission highlighted the significant growth in allocations for indirect grants in the 2014 MTEF. The Commission indicated that there is a need for systematic interventions to address poor performance and the inclusion of phase-out strategies in the indirect grant frameworks. With regards to the RHIG, the Commission indicated the municipal capacity be thoroughly assessed prior to allocations through the direct component of the grant. The Committee was concerned with the increase in indirect grants and their effect on ongoing efforts aimed at improving service delivery in the provincial and local spheres of government. National Treasury reported that the formulation of indirect conditional grants was based on the premise of ensuring that service delivery continues while work was underway in building capacity in the affected departments and entities.