• UGI USER
  • Jan 31, 2024
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16th (Sixteenth) Finance Commission

@newsonair - PIB_India

News

  • With the President of India’s approval, the government named four members of the 16th Finance Commission (F.C.) on January 31, 2024.

Members and Other Aspects of 16th F.C.

  • Full-time members include former Secretary Ajay Narayan Jha, former Special Secretary for Expenditure Annie George Mathew, and Executive Director of Artha Global Dr. Niranjan Rajadhyaksha;
  • Soumya Kanti Ghosh, Group Chief Economic Advisor at State Bank of India, has been appointed as a part-time member;
  • The Sixteenth Finance Commission was established on December 31st,2023, with Arvind Panagariya, former Vice-Chairman of NITI Aayog, as its Chairman;
  • It is requested that the recommendations of the Sixteenth Finance Commission be made available by October 31, 2025, for an award period of five years beginning on April 1, 2026.

16th F.C. Major Roles & Responsibilities

  • Main Objective: The commission is tasked with the crucial duty of proposing the revenue sharing formula between the Center and the States for the next five years, beginning on April 1, 2026;
  • Division of Tax Proceeds: Outlining how taxes should be split between the central government and the states in accordance with Chapter I, Part XII of the Constitution. This includes dividing up the tax revenue among the States in shares;
  • Guidelines for Grants-in-Aid: Establishing the principles governing grants-in-aid to States from India’s Consolidated Fund. This includes figuring out how much money should be given to the States as grants-in-aid, namely under Article 275 of the Constitution, for uses other than those mentioned in the Article 1 of Constitution;
  • Improving State Funds for Local Bodies: Deciding how to improve a state’s consolidated fund. The purpose of this is to enhance the resources that Panchayats and Municipalities in the State have access to, in accordance with the suggestions put forth by the Finance Commission of the State;
  • Assessment of Funding for Disaster Management: The Commission may examine the current arrangements for funding initiatives pertaining to disaster management.This entails reviewing the funds established by the Disaster Management Act of 2005 and making appropriate suggestions for enhancements or modifications;

NOTE: The 15th Commission (chaired by ‘N.K.Singh) was formed on November 27th, 2017. it provided recommendations for six years beginning on April 1, 2020 and the recommendations of the Fifteenth Finance Commission are valid until the fiscal year 2025-26.

Finance Commisions

Constitutional Setup: FCs are constitutional bodies that are established every five years in accordance with Article 280 of the Constitution to provide recommendations regarding the allocation of funds between the Union and the states;

@ey.com

About F.Cs.:

  • Finance Commissions (FCs) are essential in determining India’s fiscal federalism and development path;
  • They offer recommendations regarding the allocation of funds for a five-year period both between the states and the Union.
  • Additionally, FCs offer direction and counsel on a range of topics pertaining to public finance, governance, and development, including statistical systems, fiscal consolidation, debt management, local government, disaster relief, health, education, and justice delivery;
  • FCs have significantly improved the Union and state governments’ fiscal autonomy, equity, and efficiency as well as the nation’s competitive and cooperative federalism.

Three primary areas are covered by F.C. recommendations:

  • Vertical Devolution: The portion of states that make up the divided pool of central taxes;
  • Horizontal Distribution: The distribution of funds among states according to a formula that takes into account each state’s financial requirements, capabilities, and performance;
  • Grants-in-aid: Extra funds allocated to particular states or industries in need of support or change.

 

 

Source: newsonair

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