In a significant development, the government has appointed renowned economist and former Vice-Chairman of Niti Aayog, Dr. Arvind Panagariya, as the Chairman of the 16th Finance Commission. The announcement, made on December 31, underscores the government’s commitment to bringing seasoned expertise to the forefront of financial decision-making.
The Union Cabinet, chaired by Prime Minister Narendra Modi, had previously approved the Terms of Reference (ToR) for the 16th Finance Commission. The commission, tasked with reviewing and suggesting tax devolution between the Centre and states, as well as proposing revenue augmentation measures, is set to play a crucial role in shaping India’s financial landscape.
Accompanying Dr. Panagariya on this journey is Ritvik Ranjanam Pandey, the Joint Secretary in the finance ministry, who has been appointed as the secretary to the commission. The newly formed commission will operate with a focus on the five-year period from 2026-27 to 2030-31, with a mandate to submit its comprehensive report to the President by October 31, 2025.
The Finance Commission, a constitutional body, holds a pivotal role in offering suggestions on centre-state financial relations. Dr. Arvind Panagariya, known for his extensive experience and contributions to economic policy, is expected to bring a wealth of knowledge to the commission’s deliberations.
Among the critical areas that the 16th Finance Commission is set to address is the review of existing arrangements for financing disaster management initiatives, particularly in light of funds constituted under the Disaster Management Act, 2005. This signifies the commission’s commitment to aligning financial strategies with the ever-evolving challenges faced by the nation.
The previous 15th Finance Commission, under the leadership of NK Singh, had recommended that states receive 41 per cent of the divisible tax pool of the Centre during the five-year period from 2021-22 to 2025-26, aligning with the recommendations of the 14th Finance Commission.
As Dr. Arvind Panagariya takes on the responsibility of steering the 16th Finance Commission, the nation looks forward to the formulation of forward-thinking fiscal policies that will not only address current challenges but also contribute to the long-term economic growth and stability of India.
