Government Sets Wheels In Motion For Sixteenth Finance Commission, Appoints Senior IAS Officer To Key Position

The Indian government has commenced the process of constituting the sixteenth Finance Commission, a pivotal body responsible for determining the tax-sharing mechanism between the central and state governments.

As reported by Indian Express, The formation of the Commission is anticipated to be finalised by year-end.

It is expected that the ‘Terms of Reference’ and the selection of Commission members will be announced shortly, post-state elections.

The government has appointed Ritvik Ranjanam Pandey, a distinguished Indian Administrative Service (IAS) officer, belonging to the 1998 batch of the Karnataka cadre, to the role of Officer on Special Duty for the advance cell of the sixteenth Finance Commission.

It is worth noting that Pandey had previously served as Deputy Secretary during his tenure with the Thirteenth Finance Commission back in 2009-10.

The Sixteenth Finance Commission will play a pivotal role in shaping fiscal policies for the upcoming five-year period commencing from 2026-27.

The Commission's recommendations are expected to be taken into consideration during the presentation of the budget for the fiscal year 2026-27.

The Finance Commission, established under Article 280 of the Indian Constitution, primarily focuses on making recommendations pertaining to the equitable distribution of tax revenues among the union and individual states, as well as among the states themselves.

Its core mission involves addressing the fiscal imbalances existing between the central and state governments in terms of taxation powers and expenditure responsibilities.

Furthermore, the Commission strives to ensure equalisation in the provision of public services across various states.

The fifteenth Finance Commission, presided over by NK Singh, presented two significant reports. The initial report, encompassing recommendations for the financial year 2020-21, was tabled in Parliament in February 2020.

Subsequently, the final report, which delineated recommendations for the 2021-26 period, was presented in Parliament on 1 February, 2021.

For the period spanning 2021-26, the fifteenth Finance Commission advocated a state share of 41 per cent in central taxes, consistent with the preceding period (2020-21).

This figure represented a slight reduction from the 42 per cent share recommended by the fourteenth Finance Commission for the 2015-20 period, with the 1 per cent adjustment specifically accounting for the newly formed union territories of Jammu and Kashmir, and Ladakh.