Source: This post is based on the article “Government of India constitutes Sixteenth Finance Commission with Dr. Arvind Panagariya as its Chairman” published in “PIB” on 31th December 2023.
Why in the News?
With the approval of the President of India, the Government of India has constituted the Sixteenth Finance Commission in pursuance of Article 280(1) of the Constitution.
What is the composition of the 16th finance commission?
1) Dr Arvind Panagariya, former Vice-Chairman, NITI Aayog will be the Chairman.
2) Shri Ritvik Ranjanam Pandey has been appointed as Secretary to the Commission.
3) Members of the Sixteenth Finance Commission would be notified separately.
What are the Key Terms of Reference for the 16th Finance Commission?
Duration: 5 years starting from April 1, 2026.
Terms of Reference (ToR): The 16th FC shall make recommendations regarding-
1) The distribution between the Union and the States of the net proceeds of taxes which are to be divided between them and allocation among States of the respective share of such proceeds.
2) 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 under Article 275 of the Constitution.
3) The measures needed to augment the Consolidated Fund of a State to supplement resources of the panchayats and local bodies on the basis of recommendations made by the respective State Finance Commissions.
Note- The 16th FC may review the existing arrangements on financing Disaster Management initiatives, with reference to funds established under the Disaster Management Act, 2005 and make appropriate recommendations.
What is the Finance Commission?
| Specifications | Details |
| Type | Constitutional body |
| Constitutional Provision | Article 280 |
| Constituted by | It is a non-permanent body constituted by President every five years or earlier. |
| Composition | Consists of a Chairman and four other members |
| Functions | Click Here to read |
| First Finance Commission | Constituted under the chairmanship of Shri K.C. Neogy in 1952 |
| 15th Finance Commission | 1) The 15th FC was constituted in 2017 under N K Singh. It submitted two reports: the first report for the financial year 2020-21 and a final report for an extended period of 2021-22 to 2025-26. 2) As a result, the 15th FC made its recommendations for a six-year period from 2020-21 to 2025-26. 3) Previously, various FCs have been constituted for a period of more than 5 years. While the Eleventh Finance Commission was constituted for six years, the Fourteenth Finance Commission was constituted for five years and two months. |
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