The central government appointed Arvind Panagariya as the head of the Finance Commission. The Commission’s key responsibility is to recommend the tax revenue distribution formula between the Centre and the States for the upcoming five-year term starting in April 2026.
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Background
Former Niti Aayog Vice-Chairman Arvind Panagariya has been named Chairman of the 16th Finance Commission. Panagariya, who served as the Vice Chairman of Niti Aayog from January 2015 to August 2017, is a well-known economist who teaches economics at Columbia University.
Issue
The Finance Ministry officially announced Arvind Panagariya’s selection as the head of this Constitutional authority. The Commission’s terms of reference were earlier agreed by the Cabinet on November 29. Panagariya’s status as its head is cemented by the sign of President Draupadi Murmu.
Arvind Panagariya’s departure from Niti Aayog
After a two-year tenure, the economist announced his surprising departure from the Niti Aayog in August 2017. While suspicion over Panagariya’s relationship with the Centre began, Prime Minister Narendra Modi lauded him, saying he had quietly worked wonders in designing the new organization that replaced the Planning Commission.
At a Niti Aayog ceremony for CEOs PM Modi remarked that he would like to congratulate Niti Aayog Vice-Chairman Arvind Panagariya in particular for demonstrating how work is done in mission mode. He also went on to say that he has done good work, and the country will always remember him and his contribution
Panagariya has praised the Modi government‘s significant reforms while arguing that the country needs more labor reform and less protectionism to reach its full potential growth.
Five-year plan
Earlier this year, the economist predicted that India would be the world’s third-largest economy by 2026. According to him, India has expanded at an annual average pace of 10.22% in current dollars during the last two decades.
The Commission plans to present its recommendations by October 2025, allowing plenty of time for the proposed tax revenue sharing formula to be adopted into the fiscal year 2026-27 Budget exercise. The Fifteenth Finance Commission, chaired by NK Singh, was established in November 2017, with its terms of purpose later extended to prolong its tenure to six years in 2019.
The 16th Finance Commission will be led by Panagariya, with Ritvik Ranjanam Pandey serving as secretary.
