india-announces-formation-of-sixteenth-finance-commission-to-be-headed-by-arvind-panagariya

Government of India with the approval of the President of India, has formally constituted the Sixteenth Finance Commission, in accordance with the provisions of Article 280(1) of the Constitution. Arvind Panagariya, former Vice-Chairman of NITI Aayog and Professor at Columbia University, has been appointed as the Chairman of the commission.

 

The announcement, made today, marks a crucial step in formulating fiscal policies that will impact the Union as well as the States. The Members of the Sixteenth Finance Commission will be notified separately, bringing together a diverse group of experts to deliberate on complex economic matters.

 

Notably, Shri Ritvik Ranjanam Pandey has been appointed as the Secretary to the Commission, tasked with facilitating the seamless functioning of the commission and ensuring effective communication between stakeholders.

 

The detailed terms of reference for the Sixteenth Finance Commission have been outlined in the notification issued on 31st december, 2023. The commission is entrusted with making recommendations on three key matters such as distribution of Net proceeds of taxes, determining the division between the Union and the States of the net proceeds of taxes under Chapter I, Part XII of the Constitution, and allocating the respective shares among the States.

 

Additionally, it has laid defining the principles guiding grants-in-aid of the revenues of the States from the Consolidated Fund of India, along with specifying the sums to be paid to the States under article 275 of the Constitution, excluding the purposes mentioned in the provisions to clause (1) of that article.

 

Supplementing State Resources: Recommending measures to augment the Consolidated Fund of a State to bolster the resources of Panchayats and Municipalities in the State based on the recommendations of the Finance Commission of the State.

 

Additionally, the Sixteenth Finance Commission has been tasked with reviewing the current financing arrangements for Disaster Management initiatives, focusing on the funds constituted under the Disaster Management Act, 2005 (53 of 2005). Thereafter, the commission shall provide appropriate recommendations to enhance the effectiveness of such initiatives.

 

The commission is expected to submit its comprehensive report by the 31st day of October, 2025, covering a comprehensive period of five years beginning, April 1, 2026.