Arvind Panagariya, the former vice-chairman of Centre's topmost think-tank NITI Aayog and a professor of Columbia University, has been appointed as the chairman of the 16th Finance Commission, as per a government order issued on December 31.
The order notified the formation of the 16th Finance Commission and listed Panagariya as its chief, but a notification for the appointment of other panel members would be issued separately.
"The Chairman and other members of the Commission shall hold office from the date on which they respectively assume office up to the date of submission of Report or 31st day of October, 2025, whichever is earlier," the order stated.
This means that the 16th Finance Commission will make its report available by October 31, 2025 covering a period of five years starting April 1, 2026. The notification further said that Ritvik Ranjanam Pandey, Joint Secretary in the Department of Revenue, will be the Secretary to the commission.
Panagariya, who is currently a professor of Indian political economy at Columbia University, New York, served as the first vice chairman of the NITI Aayog, a policy think tank created by the government of India and chaired by the Indian Prime Minister Narendra Modi, from 2015 to 2017. He is also former chief economist of the Asian Development Bank and has worked with the World Bank, International Monetary Fund and United Nations Conference on Trade and Development in various capacities.
The cabinet on November 29 had 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 commission will also provide its recommendations on the principles that should govern the grants-in-aid of the revenues of the states out of the Consolidated Fund of India and the sums to be paid to the states by way of grants-in-aid of their revenues, among others.
The panel's predecessor, the 15th Finance Commission, which was set up on November 27, 2017, was chaired by the member of the erstwhile Planning Commission, NK Singh. The recommendations of this commission is valid for a period of six years from April 1, 2020, that is 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. A working group led by finance secretary TV Somanathan was set up to assist in drawing up the terms of reference taking into account the views and suggestions from states and Union Territories.
Media reports had claimed that the Terms of Reference of the 16th Finance Commission were partial and generic compared to those given to the 15th Finance Commission. Somanathan, earlier this month, said that while the terms may be shorter compared to some previous ones, the suggestions of states were taken on board.
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