The newly formed 16th Finance Commission, under Arvind Panagariya, is reaching out to the public for their views on how best to distribute tax revenues between the Centre and states.
Views from the public, institutions and various organisations will also be sought on such critical issues as central grant to states, consolidated funds of states and funds for diaster management.
The 16th Finance Commission was constituted on December 31, 2023. Former expenditure secretary Ajay Narayan Jha, retired bureaucrat Annie George Mathew and economist Manoj Panda are full-time members of the commission, while SBI group chief economic adviser Soumya Kanti Ghosh is a part-time member.
The panel would submit its report to the President by October 31, 2025. The report would be for five years, commencing April 1, 2026.
Suggestions may be submitted through the website of the 16th Finance Commission
This public outreach aims to gather diverse perspectives on critical issues impacting India’s fiscal framework.
A central question revolves around how to best divide the net proceeds of taxes between the central government and individual states.
The Finance Commission determines this formula, aiming for a fair and equitable distribution that considers factors such as population, poverty levels and economic development.
The Commission is also seeking proposals on how to determine the principles and amounts of financial assistance provided by the central government to states. These grants play a vital role in supporting state finances for various developmental and social welfare programs. Strengthening the financial resources of panchayats and municipalities is another area of focus.
The finance panel is seeking suggestions on how to supplement the Consolidated Fund of a State to support local governance. This could involve exploring innovative financing mechanisms or proposing a revised formula for allocating funds to local bodies.
The Commission is reviewing current practices for financing disaster response and mitigation efforts as the country is frequently affected by natural disasters.
Public suggestions could help identify areas for improvement, potentially leading to a more efficient and effective allocation of resources.
The 15th Finance Commission under NK Singh had recommended that states be given 41 per cent of the divisible tax pool of the Centre during 2021-22 to 2025-26, which is at the same level as recommended by the 14th Finance Commission under Y.V. Reddy.
