After the appointment of Arvind Panagariya as Chairman of the 16th Finance Commission, the government has now announced the appointment of three full-time members and one part-time member of the Commission. Former Finance and Expenditure Secretary Ajay Narayan Jha, who was also the member of 15th Finance Commission, has been appointed as full-time member along with Annie George Mathew, former Special Secretary in Department of Expenditure and Niranjan Rajadhyaksha, Executive Director of Artha Global. Soumya Kanti Ghosh, Group Chief Economic Advisor of public sector lender State Bank of India (SBI), has been appointed as a part-time member in the Commission. Among the members, Jha, a former 1982 batch IAS officer of the Manipur cadre, has served in several positions in the earlier Finance Commissions. Before being a member of the 15th Finance Commission, Jha also served as Member Secretary of 14th Finance Commission, which was headed by former RBI Governor YV Reddy. The Finance Commission mainly decides the tax sharing formula between the Centre and the states. The 16th Finance Commission is expected to submit its recommendations by October 31, 2025, covering an award period of five years beginning April 1, 2026. In November, the Union Cabinet chaired by Prime Minister Narendra Modi had approved the Terms of Reference for the 16th Finance Commission. As per the terms of reference (ToR), “The 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.” It shall also make recommendations on 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,” according to a statement issued after the Union Cabinet meeting on November 29. Following this, Finance Secretary TV Somanathan had said that the Terms of Reference for the 16th Finance Commission are short but “all-encompassing” and that the ToR had been prepared after consultation with states. He had clarified that the terms are not limited or preliminary, and though they are shorter than recent commissions, they offer greater leeway to stakeholders so that their inputs can be taken into account.
