Finance Commission

The forthcoming Budget would incorporate the recommendations of the 16th Finance Commission which has already submitted its report to President Droupadi Murmu. The Finance Commission, which has been set up under the Constitution, provides a formula for devolution of taxes between Centre and states. Cesses and surcharge levied by Centre are not part of the divisible pool. The Finance Commission is a constitutional body that gives suggestions on Centre-state financial relations and is set up periodically. The 16th Finance Commission, headed by former Vice Chairman of Niti Aayog Arvind Panagariya, was set up on December 31, 2023. Led by Panagariya, Finance Commission members - Retired bureaucrat Annie George Mathew, economist Manoj Panda, SBI Group Chief Economic Advisor Soumya Kanti Ghosh and RBI Deputy Governor T Rabi Sankar - and Secretary to the Commission Ritvik Pandey submitted its report to Murmu on November 17, 2025. The Commission also presented a copy of the report to Prime

An examination of Finance Commission awards from the 11th to the 15th shows that transfers to states have not materially strained the Centre's finances, even during periods of higher devolution

Most states have reduced their market borrowings, and raised less-than-projected amounts via state government securities, pushing up yields for short-term papers that the Centre typically uses

Panel's recommendations sent to PM and finance minister; report to be tabled in Parliament

Chairman of the 16th Finance Commission Arvind Panagariya on Monday submitted to President Droupadi Murmu the panel's report, which will provide the formula for devolution of taxes between the Centre and states. The commission, which was mandated to submit its report by October 31, was given an extension of one month till November 30. "Members of the 16th Finance Commission, led by its Chairman, Dr Arvind Panagariya, called on President Droupadi Murmu and submitted the Commission's report for 2026-31," Rashtrapati Bhavan said in a post on X. As per the terms of reference, the 16th Finance Commission is mandated to determine the formula for states' share of central taxes and the grants-in-aid for five years beginning 2026-27. The commission has visited all states and Union Territories as a precursor to firming up its views on states' share in grants in aid and taxes. The commission has four members-- Retired bureaucrat Annie George Mathew and economist Manoj Panda are full-time ..

The government has extended the tenure of the 16th Finance Commission by one month till November 30. The 16th Finance Commission was constituted by the government on December 31, 2023, with former Niti Aayog vice-chairman Arvind Panagariya as its Chairman. The report by the panel was due by October 31. The Commission will mainly make recommendations on the distribution of taxes between the Centre and states for a 5-year period starting April 1, 2026. The Finance Ministry, in a notification dated October 10, said that the date for submission of the 16th Finance Commission report is being extended till November 30. The Commission has four members and is assisted by Secretary Ritvik Pandey, two joint secretaries and one economic advisor. Retired bureaucrat Annie George Mathew and economist Manoj Panda are full-time members of the Commission, while SBI Group Chief Economic Advisor Soumya Kanti Ghosh and RBI Deputy Governor T Rabi Sankar are part-time members. Besides suggesting tax .

Its current horizontal devolution formula is insufficient to prepare cities to deal with floods and droughts caused by climate change

Payout with sizeable arrears will hit core inflation harder, as it propels demand for goods and services overtime, and leads to an instantaneous reset of housing rents

Former RBI Governor Raghuram Rajan noted that the previous finance commissions devolved more funds to the local bodies and urged for greater decentralisation in India

Andhra Pradesh Chief Minister N Chandrababu Naidu on Wednesday met Union Finance Minister Nirmala Sitharaman and sought additional financial support of Rs 10,000 crore for various projects. On his second day of the visit, the Telugu Desam Party (TDP) chief -- a key NDA ally -- highlighted that the state is still facing a deficit of financial resources due to bifurcation, an official release said. Naidu requested the central government to grant an additional allocation of Rs 10,000 crore under the Special Assistance to States for Capital Investment (SASCI) scheme for 2025-26. He sought the release of the second tranche of funds as a grant to Amaravati capital, and appealed to the Union Minister to make up for the revenue deficit faced by the state under the 16th Finance Commission. He submitted a memorandum requesting financial support for various state projects. The chief minister informed Sitharaman that the construction of Amaravati requires a total of Rs 79,280 crore, with work

Meghalaya Chief Minister Conrad K Sangma advocated for enhanced financial support to the smaller Northeastern states, citing their unique geographical, economic, and developmental challenges. Sangma took up the issue during his meeting with members of the 16th Finance Commission in New Delhi on Monday. "Our states face distinct issues related to terrain, infrastructure gaps, and limited revenue-generating capacities. We need special financial consideration to address these structural disadvantages," Sangma said at the meeting. He urged the finance commission to recommend higher fund devolution and more flexible schemes to help smaller states address critical sectors such as roads, healthcare, education, and tourism. Sangma also called for greater autonomy in the utilisation of centrally allocated funds, allowing states to design projects suited to their needs. The commission assured him that the submissions would be carefully examined. "North East States, while having their own u

T Rabi Sankar's appointment comes after Ajay Narayan Jha, one of the full-time members of the commission, stepped down due to personal reasons

More than 22 states have asked the 16th Finance Commission to raise their share of central tax revenue from 41 per cent to 50 per cent, says chairman Arvind Panagariya

The Jharkhand government on Friday appealed to the Sixteenth Finance Commission to raise the vertical devolution of central taxes from the existing 41 per cent to 50 per cent. A finance commission team, headed by its chairman Dr Arvind Panagariya, held discussions with the state government. Jharkhand Finance Minister Radhakrishna Kishore and Chief Secretary Alka Tiwari were present during the meeting. "Increase the vertical devolution share from 41 per cent to 50 per cent," the state government appealed to the panel. The commission also held a series of meetings with representatives from local bodies, trade organisations, industry associations, chambers of commerce, and political parties. The finance commission team on Thursday visited Jharkhand's temple town of Deoghar and offered obeisance at the Baba Baidyanath temple. The finance panel also held discussions with representatives of panchayati raj institutions and administrators of urban local bodies from all six districts of ..

Only seven out of 36 districts in Maharashtra contribute 54 per cent of the gross state domestic product (GSDP), which stood at Rs 45 lakh crore in 2024, a government report has said, indicating a stark regional imbalance. These seven districts, where economic activities are largely concentrated in the state, which is considered an economic powerhouse in the country, include two districts of Mumbai, Pune and Nagpur. The report submitted to the 16th Finance Commission revealed that 18 districts have a growth rate less than 0.8x of the GSDP expansion rate and per capita income below average state income. GSDP measures the total value of goods and services produced within a state's boundaries during a specific period. While Maharashtra's per capita income was 148 per cent of the national average, 12 districts in the state have per capita income below the national average, it said. According to the report, the state government has formulated district strategic plans spanning five year

Chairman of the Sixteenth Finance Commission Dr. Arvind Panagariya on Monday said the commission will submit its report to the central government by October 31. Panagariya said this in a meeting of the commission held here with Chief Minister Pushkar Singh Dhami. The chairman praised Uttarakhand for moving ahead rapidly on the development front and said that in view of the difficult geographical conditions, extensive discussions will be held to find solutions to the challenges being faced by other hill states, including Uttarakhand. Earlier in the meeting, CM Dhami presented his views on the financial situation, challenges and development needs of the state. He requested the Finance Commission to provide suitable compensation in keeping with the spirit of 'environmental federalism' in view of Uttarakhand's 'eco service cost', increase the weightage of forest cover in 'tax-devolution' to 20 per cent and consider special grants for proper management and conservation of forests in the

The second important issue raised by some states was that of the increased use of cesses and surcharges by the Union

The former finance secretary was appointed secretary, expenditure, in the Ministry of Finance in October 2017 and remained in office until February 2019

The Nitish Kumar government in Bihar on Thursday made a fresh demand for special category status before the 16th Finance Commission, members of which are currently on a tour of the state. This was disclosed by Arvind Pangariya, the renowned economist who is also the chairman of the commission, while interacting with the media after receiving the state government's memorandum. "It was a lengthy presentation made in the presence of the chief minister, his deputies and other cabinet colleagues, besides top officials... prior to Bihar, we have covered 20 states. Our tours began in June last year, after the Election Commission lifted the Model Code of Conduct imposed during Lok Sabha polls," Pangariya said. "The demand for a special category status is part of the memorandum of the Bihar government... (but) this is not something that the Finance Commission has jurisdiction over," he said. "At the moment, no state has special category status. It used to be under the Planning Commission. .

Madhya Pradesh Chief Minister Mohan Yadav on Thursday asked the 16th Finance Commission to increase the share of states in the Central taxes pool from the current 44 per cent to 48 per cent to ensure the nation's development. Developed India cannot be built without a developed Madhya Pradesh, Yadav said while addressing a meeting with the chairperson and members of 16th Central Finance Commission at Kushabhau Thackeray International Convention Centre here. "The strength of the nation lies in the strength of the states. Therefore, the share of the states in Central taxes and revenue receipts, i.e. grants, must be increased. By getting more financial grants from the Union government, the states will be able to achieve their long-term goals in the short term," the CM said. Asserting that MP was progressing rapidly in the fields of agriculture, infrastructure, education, health, forest, tourism, urban development and industrial development, he said strong financial support/grants are ..