NEW DELHI: On Wednesday, the Cabinet approved ‘Terms of Reference’ (ToR) for the 16th Finance Commission. However, further updates are slated to arrive at a later date, according to government sources.
Currently, it has been decided that the Commission will be functional for a period of five years from April 1, 2026 to 2031, whereupon the referential reports are slated to be submitted by October 2025.
According to press agencies, the Union Minister for Information and Broadcasting Anurag Singh Thakur said on Wednesday that the members of the commission would be notified “as soon as possible” since the Cabinet will have to finish the report’s formulation within two years from the date of appointment.
The terms of reference had been approved by Prime Minister Narendra Modi on Tuesday evening. “It takes about two years for the finance panel to submit its report,” Thakur noted, adding that these developments will take place in consultation with the Centre. Presently, the commission will be looking into the devolution of taxes between the central government and the states for the five-year period of the 16th Finance Commission.
The Union Budget 2023-24 had already made allocations of Rs 10 crore to establish offices for the 16th Finance Commission, having already initiated the process of setting up the commission itself. Earlier this month, Ritwik Pandey, IAS officer from the Karnataka cadre, was also appointed as an Officer on Special Duty for the Advance Cell of the finance panel. He was, initially, the Joint Secretary of the Department of Revenue at the Finance Ministry.
The 15th Finance Commission, chaired by NK Singh, was set up in November 2017, for the period 2021-2026. The finance panel had been given an extended mandate for a period of six year due to the Covid-19 pandemic as well as an expansion of its ToR.
The Commission was asked to submit two reports — a first report for financial year 2020-2021 and a final report for an extended period of 2021-2022 to 2025-2026.