 "The Sixteenth Finance Commission submits its five-year fiscal blueprint")
The Sixteenth Finance Commission, chaired by Arvind Panagariya, submitted its report for 2026–31 to President Droupadi Murmu on Monday. A copy was later shared with Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.
The Finance Commission is a constitutional body formed every five years to devise the formula for distributing net tax proceeds between the Centre and states, as well as among states and local bodies.
At present, India shares 41 per cent of federal taxes with states, as recommended by the Fifteenth Finance Commission.
In a press statement, the finance ministry said the Sixteenth Finance Commission had analysed the finances of the Union and states in detail. Its report follows wide-ranging consultations with Union, state, and local governments; chairpersons and members of previous commissions; academic and multilateral institutions; the commission’s Advisory Council; and other domain experts.
The report will be placed in the public domain once it is tabled in Parliament by the finance minister under Article 281.
The full-time members of the commission are former expenditure secretary Annie George Mathew and Manoj Panda, former director of the Institute of Economic Growth, Delhi.
Reserve Bank of India Deputy Governor T Rabi Sankar and State Bank of India Group Chief Economic Advisor Soumya Kanti Ghosh serve as part-time members.
The commission is assisted by Secretary Ritvik Pandey, two joint secretaries, and one economic advisor.
The commission’s mandate includes recommending the distribution of net tax proceeds between the Union and states and the allocation of shares among the states. According to its terms of reference, it will also suggest measures to augment the Consolidated Fund of each state to supplement the resources of panchayats and municipalities.
The government recently extended the commission’s tenure by one month, to November 30. It was constituted on December 31, 2023.
The finance ministry will examine the recommendations before the next Union Budget. Centrally sponsored and central sector schemes were aligned with Finance Commission cycles to match the resources of the Centre and states.
The Sixteenth Finance Commission’s cycle begins on April 1, 2026. Schemes ending then, and proposed for continuation into the next cycle, will undergo an appraisal and approval process based on an outcome review.