In a significant development, the government has appointed key members to the Sixteenth Finance Commission (SFC), a crucial body tasked with determining the distribution of the Centre’s tax revenue to states for the next five years, starting from FY27.

According to a gazetted notification issued late on Tuesday, the newly appointed members include three full-time members: A N Jha, former expenditure secretary and member of the 15th Finance Commission; Annie George Mathew, former special secretary of the department of expenditure; and Niranjan Rajadhyaksha, executive director of Artha Global. Additionally, Soumya Kanti Ghosh, the group chief economic advisor of the State Bank of India, has been appointed as a part-time member of the commission.

The government had earlier appointed Arvind Panagariya, former vice-chairperson of NITI Aayog, to lead the SFC in December. The commission, under Panagariya’s leadership, is expected to formulate the formula for sharing a significant portion of the Centre’s tax revenue with states for the next five years.

The members of the SFC, including the chairman, will hold office from the date they assume their respective positions until the submission of the report or October 31, 2025, whichever comes earlier, as per the notification approved by President Droupadi Murmu.

The SFC’s responsibilities extend beyond revenue sharing, encompassing the enhancement of states’ consolidated funds for local bodies, disaster management fund reviews, and ensuring efficient financing systems for local bodies as advised by state finance commissions.

By keeping the ‘terms of reference’ concise, the government has provided the SFC with flexibility in making recommendations within constitutional limits, avoiding past controversies related to the commission’s terms of reference.

As the SFC gears up to play a pivotal role in shaping the fiscal landscape, it is expected to contribute significantly to the economic trajectory of the country.

For detailed updates on the SFC’s progress and other financial news, stay tuned to Magadh Today.