Centre approves 16th Finance Commission's terms of reference, extends PMGKAY to 2028
Narendra Modi, which met on Tuesday night, has approved the terms of reference for the 16th Finance Commission, though the government is yet to choose the commission's members, information and broadcasting minister Anurag Thakur said on Wednesday. The cabinet also extended the tenure of the Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY) for another five years from 1 January 2024 and allocated another ₹11,80,000 crore to the scheme, which provides free rations to the poor, Thakur added. The PMGKAY scheme, launched during the pandemic to support people amid lockdowns, has been vital for the poor, the minister said.
"Over 80 crore people have benefited from the PMGKAY scheme, which has now been extended for another five years," he said. Under PMGKAY, Antyodaya Anna Yojana households, which constitute the poorest of the poor, are entitled to 35 kg of foodgrains per family per month, while priority households get five kg per person per month. At present, up to 75% of the rural population and 50% of the urban population are in AAY households and priority households.
Meanwhile, the 16th Finance Commission will submit its report by October 2025, Thakur said. "These recommendations will be valid for five years, from 1 April 2026 to 31 March 2031," he added. The terms of reference of the 16th Finance Commission are crucial for the sharing of tax revenue between the union government and states, as well as among states, and thus for overall income redistribution.
The commission will also make recommendations for tax devolution and reforms, efficiency in tax administration and expenditure reforms. For states, tax devolution is a significant funding source for initiatives in the development, welfare and priority sectors. Currently,
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