Cabinet approves Creation of Positions for 16th Finance Commission

Under the Chairmanship of Prime Minister Narendra Modi, the Union Cabinet has granted approval for the establishment of three key positions at the Joint Secretary level, comprising two Joint Secretary roles and one Economic Adviser, to support the 16th Finance Commission. The formation of these positions aligns with the provisions of Article 280 of the Constitution, as indicated in the official notification dated December 31, 2023.

These newly sanctioned roles are essential to bolster the capabilities of the Finance Commission in fulfilling its mandated functions. Notably, all other necessary positions within the Commission have already been established in accordance with the delegated powers conferred upon it. This move is expected to enhance the efficiency and effectiveness of the 16th Finance Commission in addressing its responsibilities.

Recently, the Cabinet approved the terms of reference for the 16th Finance Commission. The Finance Commission shall make recommendations as to the following matters, namely:

1. The distribution between the Union and the States of the net proceeds of taxes which are to be, or may be, divided between them under Chapter I, Part XII of the Constitution and the allocation between the States of the respective shares of such proceeds;
2. The 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 for the purposes other than those specified in the provisos to clause (1) of that article; and
3. The 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 assess current funding structures for Disaster Management initiatives, specifically those outlined in the Disaster Management Act, 2005 (53 of 2005), and provide recommendations. The report, covering a five-year period from April 1, 2026, will be released by October 31, 2025.

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