Columbia University professor and the first vice chairman of Niti Aayog Arvind Panagariya has been appointed as the chairman of the 16th Finance Commission. The government is, however, yet to name the other members of the panel, which has an open mandate unlike finance commissions in recent years, where the Centre provided a large set of terms of reference.
For many, Panagariya’s appointment came as a surprise since the last four commissions were headed by those who had long stints either in the finance ministry or RBI. Barring the two-and-a half years that he spent at Niti Aayog, the former Asian Development Bank chief economist has focused on academics. He is currently the Jagdish Bhagwati professor of Indian political economy & professor of economics and director of Raj Center on Indian Economic Policies.
The 16th Finance Commission, which has less than two years to finalise its recommendations for five years, starting April 2025, will have the flexibility to decide the areas that it intends to focus on apart from the Constitutionally-mandated task of devising the formula to divide the tax revenue between the Centre and the states along with the grants in aid from the Consolidated Fund of India. Besides, it has to recommend on transfer of resources to panchayats and municipal bodies and ways to finance disaster management.