Government Appoints Arvind Panagariya as Chair of Sixteenth Finance Commission

The Government of India has formally appointed Arvind Panagariya, the former Niti Aayog vice chairman and professor at Columbia University, as the chairman of the Sixteenth Finance Commission. This commission holds the responsibility of formulating the tax revenue sharing formula between the Centre and the States for the five-year period commencing in April 2026.

The Finance Ministry has publicized Mr. Panagariya’s designation as the head of this esteemed Constitutional body. His appointment was officially documented in a notification by President Draupadi Murmu, with the commission’s terms of reference being sanctioned by the Cabinet on November 29. Renowned for his expertise in trade economics, Mr. Panagariya served as the inaugural vice chairman of the Niti Aayog from 2015 to 2017.

Moreover, Ritvik Ranjanam Pandey, a former joint secretary in the Department of Revenue, has been named as the secretary of the commission. The identities of the other members of the commission will be revealed in due course.

As per the official directive, the commission and its members will retain their positions from their respective assumption of office until the submission of the report or October 31, 2025, whichever arises first. The Commission has been tasked with submitting its recommendations by October 2025, in time for them to be incorporated into the Budget planning for 2026-27. Typically, the Finance Commission invests about two years in engaging with stakeholders at both the State and Centre levels before finalizing their recommendations.

Constituted in November 2017 under the leadership of NK Singh, the Fifteenth Finance Commission was later granted an extension to its tenure for six years in late 2019. The Commission was entrusted with the responsibility of delivering two separate reports, the first catering to 2020-21 and the second encapsulating the period of 2021-22 to 2025-26.

In addition to proposing the tax sharing formula between the Centre and the States, the Sixteenth Finance Commission will evaluate the existing funding structures for Disaster Management initiatives. It will also suggest measures to fortify the resources available to Panchayats and Municipalities from the States’ consolidated funds.

The installation of Mr. Panagariya and the impending undertakings of the Sixteenth Finance Commission will play a pivotal role in determining the fiscal framework and resource allocation between the Centre and the States. This will significantly influence budgetary planning and policy decisions for the upcoming years.