The formation of the 16th Finance Commission was initiated in accordance with Article 280 of the Constitution, outlined in the notification dated December 31, 2023.
As the chairman of the 16th Finance Commission, the former vice-chairman of NITI Aayog will have to ensure a balanced distribution of financial resources between the Centre and the states
The 16th FC faces a formidable challenge. Is 41% the appropriate allocation, or does it warrant an increase or decrease? Shouldn t all central cesses be abolished if it is to be reduced, as a quid pro quo for states acceptance?
The 16th Finance Commission which will now be headed by Arvind Panagariya will have space to focus on strengthening fiscal federalism. This finance commission is empowered to select its population data, but it lacks the 2021 census data for reference. The Centre is trying moral policing to drive fiscal prudence but is not in a position to lead by example. This will be a subtext for further devolution.