16th Finance Commission


  • The 16th Finance Commission invited suggestions from the general public, institutions and organisations on relevant issues for it and those related to its terms of reference.

About Finance Commission

  • Under Article 280 of the Constitution, the President of India is required to constitute a Finance Commission at an interval of five years or earlier.
  • Members: It has a chairman and four members appointed by the President.
  • Function: It determines the method and formula for distributing the tax proceeds between the Centre and states, and among the states as per the constitutional arrangement and present requirements.
  • Significance: The recommendations of the Finance Commission are important in determining the fiscal relations between the central and state governments.
  • The idea is to ensure a fair and equitable distribution of financial resources.

16th Finance Commission

  • The advance cell for the 16th Finance Commission was established in 2022.
  • Arvind Panagariya is appointed as the Chairman of the Sixteenth Finance Commission.
  • It shall make recommendations as to the following matters:
  • The distribution between the Union and the States of the net proceeds of taxes 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.
  • The measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats and Municipalities in the State are based on the recommendations made by the Finance Commission of the State.