16th Finance Commission submits report for 2026-31 to President
What's the story
The 16th Finance Commission, headed by economist Arvind Panagariya, has submitted its report for the period of 2026-31 to President Droupadi Murmu. The submission was made during a formal ceremony at Rashtrapati Bhavan on Monday, completing the exercise ahead of the November 30 deadline. The commission's task is to recommend how the central government's tax revenues should be shared with states, an important aspect of India's fiscal system.
Fiscal impact
Commission's role in fiscal planning and fund allocation
Established under Article 280 of the Constitution, the Finance Commission plays a crucial role in determining how tax revenues are shared between the Union and states. The current commission has been looking at various demands for changes to this formula. These include suggestions from some states that want GDP contribution, population trends, and governance indicators to be given more weightage in fund allocation.
Growth strategy
Balancing equity and growth in fund allocation
Panagariya, a former vice-chairman of NITI Aayog, said the commission's goal was to strike a balance between equity and growth incentives while reviewing the existing income-distance method for calculating devolution. The government will review these recommendations before making an announcement in the next budget cycle. The commission's recommendations are expected to shape fiscal planning and inter-state fund distribution over the next five years.