Sixteenth Finance Commission holds its first meeting
NEW DELHI : The Sixteenth Finance Commission (SFC), whose members were appointed last month, held its first meeting on Wednesday to discuss the terms of reference and other matters, the finance ministry said in a statement. The SFC acknowledged the need for wide-ranging consultations with various stakeholders, including state governments, local bodies, Union ministries, and experts, the statement said.
The SFC recognised that it would be carrying out detailed analytical work and would be required to rope in all the expertise that it could garner, including from leading research organisations, think tanks, and other organisations working in the area of fiscal federal relations, it added. The commission, constituted by the president to define the financial relations between the Central government and states, will set up its office at Jawahar Vyapar Bhawan on Janpath in New Delhi.
It will make its recommendations available by 31 October 2025, covering an award period of five years beginning 1 April 2026. While the SFC, chaired by economist Arvind Panagariya, is tasked with defining the distribution of the Centre’s tax revenue to states for five years starting FY27, it will also ensure that states have efficient systems and measures in place for financing local bodies as advised by the state finance commissions.
The SFC will suggest steps to augment the states’ consolidated funds for panchayats and municipalities, and review national and state disaster management funds. The government has kept the ‘terms of reference’ of the commission short, giving the SFC the flexibility to make recommendations governing sharing of tax revenue within constitutional limits.
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