Granting on the basis of merit (8)
I believe the answer is:
awarding
'granting on the basis of merit' is the definition.
(I've seen this before)
This is the entire clue.
(Other definitions for awarding that I've seen before include "Handing out" , "Granting in recognition of achievement" , "Granting on the basis of merit" , "Giving a prize" .)