The Union Cabinet, under the leadership of Prime Minister Shri Narendra Modi, has given the nod for the establishment of three pivotal posts at the Joint Secretary level, aimed at bolstering the operations of the 16th Finance Commission. The decision was announced through an official statement released by the government on January 18.
The three newly approved posts comprise two Joint Secretary positions and one Economic Adviser role, specifically designated to support the 16th Finance Commission in the execution of its functions. The statement emphasized that all other positions within the Commission have already been established in accordance with the delegated powers.
This development follows the recent appointment of Arvind Panagariya, former vice-chairman of NITI Aayog and a professor at Columbia University, as the Chairman of the 16th Finance Commission on December 31. The Commission, formed in accordance with Article 280 of the Constitution, is tasked with recommending the distribution of taxes between the Centre and states, as well as among the states.
The 16th Finance Commission is scheduled to present its comprehensive report by October 31, 2025. The Cabinet had previously sanctioned the terms of reference for the Commission on November 29, outlining its responsibilities for the allocation and distribution of tax proceeds over a five-year period starting from April 1, 2026.
“The recommendations of the commission, which will be notified in due course, will cover a period of five years starting April 1, 2026,” the statement explained.
The Finance Commission, a constitutional body, plays a crucial role in providing recommendations on financial relations between the central and state governments. The preceding 15th Finance Commission, led by NK Singh, had proposed a tax devolution of 41 percent to the states from the divisible tax pool of the Centre during the period from 2021-22 to 2025-26. This allocation remained consistent with the recommendation made by the 14th Finance Commission.
The new posts approved by the Cabinet are expected to fortify the administrative backbone of the 16th Finance Commission as it navigates the complex landscape of financial distribution and fiscal recommendations for the nation.