Union Cabinet Approves Creation of 3 Officer level Posts to Assist 16th Finance Commission

The Union Cabinet, chaired by Prime Minister Shri Narendra Modi, has approved the creation of three Joint Secretary posts, namely two Joint Secretaries and one Economic Adviser, for the 16th Finance Commission, which was established in accordance with Article 280 of the Constitution, via Notification dated December 31, 2023.

The newly formed positions are necessary to help the Commission in carrying out its duties. All other positions in the Commission have previously been constituted in accordance with the delegation of powers.

The Finance Commission is a constitutional authority that makes recommendations on central-state financial relations. This prior statement comes after the Cabinet appointed Arvind Panagariya, former vice chairperson of Niti Aayog, as the commission’s head on December 31, and Ritvik Ranjanam Pandey as its secretary.

The 16th Finance Commission has been tasked with making recommendations on tax sharing between the Centre and the States. However, measures must be taken to complement the consolidated fund of states with resources from panchayats and municipalities, as well as to examine the financing of disaster management activities. The commission would report to the President by October 31, 2025. The report would run for five years, beginning April 1, 2026.

Aside from suggesting tax devolution between the Centre and the States and revenue augmentation measures, the commission would examine current arrangements for financing disaster management activities using funds established under the Disaster Management Act of 2005.

The previous 15th Finance Commission, led by NK Singh, suggested that states be given 41% of the Centre’s divisible tax pool from 2021-22 to 2025-26, which was the same proportion as recommended by the 14th Finance Commission.