<u>Categorical </u>grants come with stringent federal administrative conditions and strict criteria for its use; whereas <u>Block </u>grants come with less stringent federal administrative conditions and provide recipients more flexibility over how to spend grant funds.
Categorical grants are those grants issued by the government for specific purposes. These grants are issued to achieve specific goals. The local and the state government who receive these grants should strictly adhere to conditions of use for its use.
Block grants are also grants issued by the government. However, in block grants, the local and the state governments can use the grants on their own terms and requirements. This is because local governments tend to know better where grants need to be used. They are more aware of which sector needs more focus for development. Therefore, block grants come with less less stringent federal administrative conditions to provide more flexibility to the local governments on how to use the grants.
