New Delhi: Former NITI Aayog vice-chairman and former advisor to Prime Minister Narendra Modi, Arvind Panagariya will lead 16th Finance Commission as the government on Sunday appointed him as the chairman of the commission for recommending a devolution, formulated for tax revenues between the Centre and states, the ministry of finance said in an official order.
Generally, the government sets up a finance panel every five years to suggest the formula for sharing of taxes between the union and state governments. Hence, the finance ministry said in its notification that the 16th Finance Commission is asked to make its report available by October 31, 2025, covering five years from April 1, 2026.
The order of Panagariya’s appointment came a month after the government on November 29, announced terms of reference (ToR) for the 16th Finance Commission, which also asked the body to suggest measures for augmenting states’ resources for local bodies besides reviewing the existing arrangements for financing disaster management initiatives
In 2017, Mr Panagariya, an Indian-born US-based economist, who was working till now as Columbia University professor, resigned from the government's main policy think-tank, after he was hand-picked by Prime Minister Narendra Modi to lead the newly created body that replaced the former planning commission that drew Soviet-style five year economic plans.
As per the notification, issued by the department of economic affairs (DEA), an arm of the Union finance ministry, regarding the appointing of the chairman also detailed terms of reference (ToR)s for the Commission. “The distribution between the Union and the States of the net proceeds of taxes which are to be, or maybe, divided between them under Chapter I, Part XII of the Constitution and the allocation between the States of the respective shares of such proceeds,” the first ToR said.
As per the details available with the Columbia University website, Panagariya is a professor of economics and the Jagdish Bhagwati Professor of Indian political economy at the university. However, Panagariya mainly focusses on international trade policy, economic development and economic reforms with a focus to India.
However, the Sunday notification said that members of the 16th finance commission would be notified separately. It appointed Ritvik Ranjanam Pandey as secretary to the commission. On November 6, Pande, a 1998-batch lAS officer and a joint secretary in the department of revenue, was appointed as officer on special duty (OSD) for the advance cell of the 16th Finance Commission in the rank and pay of additional secretary.
“The principles which should govern the grants-in-aid of the revenues of the states out of the consolidated fund of India and the sums to be paid to the states by way of grants-in-aid of their revenues under article 275 of the Constitution for the purposes other than those specified in the provisos to clause (1) of that article,” mentioned the second ToR.
The third ToR, however, pertains to the measures needed to augment the consolidated fund of a state to supplement the resources of the panchayats and municipalities based on recommendations made by respective state finance commissions. “The 16th Finance Commission may review the present arrangements on financing disaster management initiatives, with reference to the funds constituted under the Disaster Management Act, 2005 (53 of 2005), and make appropriate recommendations thereon,” the notification said
