Ajay Narayan Jha steps down from Finance Commission with 6 months to go

About six months before the 16th Finance Commission (FC) is due to submit its report, one of the three full-time members of the body, Ajay Narayan Jha (pictured), is learnt to have stepped down. 

Jha brought extensive experience in public finance to the job. The former finance secretary was appointed secretary, expenditure, in the Ministry of Finance in October 2017 and remained in office until February 2019. 

The expenditure department handles most financial issues between the Centre and states, among other responsibilities. This was also Jha’s third consecutive term in a Finance Commission. He served as a member of the 15th and was secretary to the 14th Finance Commissions. He joined the 15th Finance Commission after replacing Shaktikanta Das, who became governor of the Reserve Bank of India.

  An email sent to the 16th Finance Commission, chaired by economist and former NITI Aayog deputy chairman Arvind Panagariya, went unanswered until the time of going to press. Jha is currently learnt to be ailing and could not be reached for comment.

  Besides these two, the other full-time members of the Commission are Manoj Panda, former director of the Institute of Economic Growth, and Annie George Mathew, former special secretary, Department of Expenditure, Ministry of Finance. Soumya Kanti Ghosh, chief economist at State Bank of India, is a part-time member.

  The Finance Commission decides on the distribution of tax revenue between the Centre and states.

  The 16th Finance Commission is mandated to submit its report by October this year, in line with its terms of reference (ToR). The Finance Commission is a constitutional body set up every five years by the President of India to decide how the tax pool should be divided between the Centre and states, and also among states. The award of the Commission under Article 280(1) of the Constitution is therefore binding on the Union finance ministry. 

Almost every Finance Commission is assigned additional ToR by the Government of India. These include principles for the distribution of grants-in-aid to states from the Consolidated Fund of India. While the 15th Finance Commission was given an extensive mandate — including the examination of ‘populist schemes’ by state governments — the ToR for the 16th Finance Commission has been far more circumspect.