The government has announced plans to appoint a new member to the 16th Finance Commission following the resignation of Niranjan Rajadhyaksha due to personal reasons.
Rajadhyaksha, Executive Director of the policy think tank Artha Global, cited unforeseen personal circumstances as the reason for his inability to fulfill the responsibilities of the position, as stated in a government release on February 19.
The government expressed its commitment to fill the vacancy, stating, "Action will be taken to appoint a Member of the 16th Commission in lieu of Dr. Rajadhyaksha."
His departure comes shortly after his appointment as a member of the commission on January 31.
The 16th Finance Commission, chaired by former NITI Aayog Vice-Chairman Arvind Panagariya, comprises other members including former expenditure secretary Ajay Narayan Jha, former special secretary Annie George Mathew, and Soumya Kanti Ghosh, the Group Chief Economic Advisor of the State Bank of India, serving as a part-time member.
The announcement of Rajadhyaksha's resignation comes in the wake of the commission's inaugural meeting held on February 14 in New Delhi, where all members were present.
In a statement following the meeting, the commission highlighted the necessity for extensive consultations with various stakeholders, including states, local bodies, ministries, and experts.
The Finance Commission holds significant constitutional authority, tasked with recommending the allocation of taxes between the central government and states, as well as among states themselves. The current iteration, with its Terms of Reference approved by the Cabinet on November 29, is mandated to submit its report by October 2025, with recommendations expected to take effect from April 1, 2026.
Presently, 41 percent of the divisible tax pool of the central government is allocated to states in 14 annual installments. Given the ongoing discourse on state finances and pre-election commitments, the recommendations of the 16th Finance Commission will be closely watched. Several states, particularly those from southern India, have voiced concerns regarding the distribution of tax revenue, contending that they contribute disproportionately more to the exchequer than what they receive in return.
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