Union Cabinet may consider constitution of 16th Finance Commission today: Report

livemint.com:

CNBC-TV18 reported. There was no official statement at the time of publishing this report. The 16th Finance Commission will be tasked to initiate the layout of centre-state financial relations for coming five years.

Its predecessor, the 15th Finance Commission, had submitted its report in November 20 that was applicable for the fiscal years ranging from FY 21-22 to FY 25-26. Earlier, Finance Secretary T V Somanathan had told news agency PTI in August that the 16th Finance Commission would be constituted by November-end. "The Finance Commission is expected to be constituted by end of November because that's the statutory requirement," he told the news agency in an interview.

One of the main tasks of the 16th Finance Commission will be to suggest the ratio in which the tax will be divided between the Centre and states for five years, starting from April 1, 2026. Tax devolution is a major source of funds for states, used for spending on development, welfare and priority-sector projects and schemes. Currently, 41 percent of taxes collected by the Centre is devolved in 14 instalments among states during a fiscal year.

Also Read: The state-versus-centre battle for resources, in six charts As India’s economic momentum has slowed over the past couple of years, the battle for public funds has only intensified, experts underline. The central government and state governments have been at loggerheads on a range of issues: the increased use of cesses by the centre, the compensation for shortfall in GST (goods and services tax) revenues, and the demand on the 15th Finance Commission to carve out funds for central subjects such as defence and internal security. From the 11th Finance Commission to the 14th, the share of net proceeds