Arvind Panagariya, Appointed Chief of 16 Finance Commission

The Finance Ministry, on Sunday, issued the notification that the Sixteenth Finance Commission has been constituted by the President of India, in accordance with Article 280(1) of the Constitution. Dr. Arvind Panagariya, former Vice-Chairman of NITI Aayog and Professor at Columbia University, will serve as the Chairman. The Finance Commission is established under Article 280 of the Constitution of India.

As per a notification issued by the Ministry of Finance’s Department of Economic Affairs, Ritvik Ranjanam Pandey, a 1998-batch Karnataka Cadre IAS officer, currently holds the position of Officer on Special Duty (O.S.D), which is an additional secretary equivalent post, in the Department of Economic Affairs, will be the secretary to the Commission. The members of the Commission will be notified separately, said the notification issued on Sunday.

The Cabinet had approved the terms of reference for the commission on November 29. Mr. Panagariya, a trade economist, previously served as the first vice chairman of Niti Aayog from 2015 to 2017, replacing the Planning Commission.

The Sixteenth Finance Commission shall make recommendations as to the following matters, namely: —

The distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, 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 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; and
The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State on the basis of the recommendations made by the Finance Commission of the State.

The Sixteenth Finance Commission is authorized to review existing arrangements for financing Disaster Management initiatives, considering the funds established under the Disaster Management Act, 2005 (53 of 2005), and to provide suitable recommendations.

Furthermore, the Commission has been tasked with submitting its report by the 31st day of October 2025. This report is expected to cover a five-year period, starting from the 1st day of April 2026.

As per the order, “The Chairman and other members of the Commission shall hold office from the date on which they respectively assume office up to the date of submission of Report or 31st day of October, 2025, whichever is earlier.”

The deadline for the Commission to submit recommendations is October 2025, ensuring inclusion in the 2026-27 Budget exercise. Typically, the Finance Commission requires about two years to consult with stakeholders in the States and Centre before reaching conclusions.

About Arvind Panagariya

He is currently a professor of Economics and the Jagdish Bhagwati Professor of Indian Political Economy at Columbia University.
He served as the first vice-chairman of NITI Aayog from January 2015 to August 2017.
In 2017, he was also India's G20 Sherpa.
In April 2023, he assumed the role of chancellor at Nalanda University.

Before concluding his term as NITI Aayog vice-chairman in 2017, PM Modi praised Arvind Panagariya's significant role. Despite leaving the country, Panagariya continued dedicated work, acknowledged during the "Champions of Change" initiative on August 22, 2017.

The Fifteenth Finance Commission, led by NK Singh and formed in November 2017, experienced adjustments to its terms of reference in late 2019, leading to an extended six-year tenure. The commission was assigned the responsibility of delivering two reports – one for 2020-21 and a final report covering the extended period from 2021-22 to 2025-26.