Niranjan Rajadhyaksha quits 16th Finance Commission, govt to appoint new member

Rajadhyaksha, executive director of policy think tank Artha Global, was named as a member of the recently constituted 16th Finance Commission on January 31.

The other members of the commission, chaired by former NITI Aayog Vice-Chairman Arvind Panagariya, are former expenditure secretary Ajay Narayan Jha and former special secretary Annie George Mathew. Soumya Kanti Ghosh, State Bank of India's Group Chief Economic Advisor, has been named as a part-time member.

The announcement of Rajadhyaksha's exit comes days after the commission met for the first time on February 14 in New Delhi, where all the members were in attendance. In a post-meeting statement, the commission said it acknowledged the need for wide-ranging consultations with various stakeholders, including states, local bodies, ministries, and experts.

The Finance Commission is a key constitutional body that recommends how taxes are shared between the Centre and states and among states. The current iteration, whose Terms of Reference were approved by the Cabinet on November 29,  will have to submit its report by October 2025, with its recommendations expected to take effect from April 1, 2026.

At present, 41 percent of the divisible tax pool of the central government is transferred to states in 14 annual instalments.

The 16th Finance Commission's recommendations will be keenly eyed given the ongoing debate on state finances and pre-election freebie announcements. Apart from freebies, some states — especially those from southern India — have raised the issue with the distribution of tax revenue, arguing that they contribute far more to the exchequer than what they get back.