The 16th Finance Commission (XVI-FC) on Wednesday discussed its ‘terms of reference’, notified by the Ministry of Finance, as it held its first meeting under the Chairmanship of Arvind Panagariya. The XVI-FC’s recommendations, upon acceptance by the Government, would cover the period of five (5) years commencing 1 April, 2026.
The meeting took place in Jawahar Vyapar Bhawan, New Delhi where the Chairman and Members were welcomed by Secretary, XVI-FC Ritvik Ranjanam Pandey and other officials of the Finance Commission.
The XVI-FC acknowledged the need for wide-ranging consultations with various stakeholders, including state governments, local bodies, ministries of the Government and experts.
The XVI-FC recognised that it will be carrying out detailed analytical work and would require to rope in all the expertise that it can garner, including that from leading research organisations, leading think tanks and other organisations working in the area of fiscal federal relations.
The XVI-FC, to be housed in Jawahar Vyapar Bhawan, will make its recommendations available by 31 October 2025, covering an award period of 5 years commencing 1 April, 2026. The Finance Commission will make recommendations on the distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them and the allocation between the states of the respective shares of such proceeds.
It will also recommend principles which should govern the grants-in-aid of the revenues of the states out of the Consolidated Fund of India and the sums to be paid to the states by way of grants-in-aid of their revenues under article 275 of the Constitution. Besides the XVI-FC will propose measures needed to augment the Consolidated Fund of a State to supplement the resources of the panchayats and municipalities in the state on the basis of the recommendations made by the Finance Commission of the state.
The Commission will offer its report by 31 October, 2025 covering a period of five years commencing on the 1 April, 2026.