Cabinet approves creation of three posts for 16th Finance Commission

All other posts in the Commission have already been created as per the delegated powers, the government added.

The Union Cabinet has approved the creation of three posts at the level of Joint Secretary - two posts of Joint Secretary and one post of Economic Adviser - for the 16th Finance Commission, the government said in a statement on January 18.

The newly created posts are required to assist the Commission in carrying out its functions. All other posts in the Commission have already been created as per the delegated powers, the government added.

The announcement comes days after the Cabinet appointed Arvind Panagariya, the former vice-chairman of Centre's topmost think-tank NITI Aayog and a professor of Columbia University, as the chairman of the 16th Finance Commission on December 31.

The 16th Finance Commission will make its report available by October 31, 2025.

Earlier, the Cabinet had on November 29 approved the terms of reference for the 16th Finance Commission, which will recommend how taxes are shared between the Centre and states and also among states.

The recommendations of the commission, which will be notified in due course, will cover a period of five years starting April 1, 2026.

The terms of reference will include the distribution of the net proceeds of taxes between the Centre and the states and the allocation between the states of the respective shares of such proceeds, the principles, grants-in-aid and the revenues of the states and measures needed to supplement the resources of the panchayats, the statement said.

The 15th Finance Commission, chaired by NK Singh, was set up on November 27, 2017 and made recommendations for a period of six years from April 1, 2020. Its recommendations remain valid till the financial year 2025-26.

The finance commission normally takes about two years to make its recommendations. The Constitution says that the finance commission has to be constituted every fifth year or earlier.

Since the recommendations of the 15th commission covered the six-year period up to March 31 2026, the next commission is being proposed to be constituted now.