The government has appointed three full time members and one part-time member to the 16th Finance Commission, a Constitutional body to decide on the tax revenue sharing formula between the federal government and the states.
Former expenditure secretary Ajay Narayan Jha, former special secretary, expenditure Annie George Mathew, and Artha Global executive director Niranjan Rajadhyaksha have been appointed full time members of the commission.
Soumya Kanti Ghosh, group chief economic advisor at State Bank of India, will be a part-time member of the commission, a finance ministry notification said.
Jha was also a member of the 15th Finance Commission.
The commission is chaired by former chairman of Niti Aayog Arvind Panagariya and will be assisted by secretary Ritvik Ranjanam Pandey, two joint secretaries, and one economic advisor.
The 16th Finance Commission was constituted on 31 December 2023 with Panagariya as its chairman. It has been asked to make its recommendations available by 31 October 2025, covering an award period of 5 years commencing 1 April 2026.
The chairman and other members of the commission will hold office from the date on which they respectively assume office up to the date of submission of a report or 31 October 2025, whichever is earlier,” mentioned the notification.
Apart from deciding on the division of tax revenues between the central government and the states, the commission’s remit also includes deciding the ratio of allocation of funds among the states themselves.
The commission will also decide on the contours of providing financial aid to the states from the Consolidated Fund of India, and the specific amounts to be granted for various purposes, apart from charting strategies to increase state funds to support local governments, based on the recommendations made by the finance commission of the states.
In a recent article, EY India’s chief policy advisor, D.K. Srivastava, said the commission might have to read between the constitutional lines and the implications of the interconnectivity among these vertical, horizontal, and fiscal imbalances.
The 16th Finance Commission has to decide about transfers, considering not only the status of vertical and horizontal imbalances but also the status of budgetary deficit and debt relative to GDP and GSDP, he said.