The government has appointed Arvind Panagariya, former Niti Aayog vice chairman and Columbia University professor, as the chairman of the Sixteenth Finance Commission. This commission will be responsible for recommending the tax revenue sharing formula between the Centre and the States for the five-year period starting April 2026.
The Finance Ministry notified President Draupadi Murmu’s order for Mr. Panagariya’s appointment as the head of this critical Constitutional body. The terms of reference for the commission were approved by the Cabinet on November 29.
Mr. Panagariya, a trade economist, previously served as the first vice chairman of the Niti Aayog from 2015 to 2017, when it replaced the Planning Commission.
The names of the other members of the Commission will be announced separately. The order also appointed Ritvik Ranjanam Pandey, a former joint secretary in the Department of Revenue, as the secretary of the panel.
According to the order, the Chairman and other members of the Commission will hold office from the date they assume office until the submission of the report or October 31, 2025, whichever is earlier.
The Commission has been given a deadline of October 2025 to submit its recommendations, which will then be incorporated into the Budget exercise for 2026-27. Typically, the Finance Commission takes about two years to consult stakeholders in the States and Centre before finalizing its conclusions.
The Fifteenth Finance Commission, chaired by NK Singh, was constituted in November 2017. Its terms of reference were later modified, and its tenure was extended to six years in late 2019. The panel was tasked with submitting two reports: a first report for 2020-21 and a final report for the extended period of 2021-22 to 2025-26.
In addition to recommending the tax sharing formula between the Centre and the States, the Sixteenth Finance Commission has been assigned the responsibility of reviewing the current financing arrangements for Disaster Management initiatives and proposing measures to bolster the consolidated funds of States to supplement resources available with Panchayats and Municipalities.
