Finance Secretary T V Somanathan, in an interview with PTI, had earlier stated that the government aims to constitute the 16th Finance Commission by the end of November, adhering to statutory requirements. The Terms of Reference (ToR) for the commission are in the finalization stage.
It’s noteworthy that the previous Finance Commission, under N K Singh, recommended a tax devolution ratio of 42 per cent, maintaining continuity with the 14th Commission. This recommendation was accepted by the central government, resulting in states receiving 42 per cent of the divisible tax pool from the Centre for the fiscal period 2021-22 to 2025-26.
The 15th finance commission’s recommendations included the fiscal deficit, debt path for the Union and states, and additional borrowing room to states based on performance in power sector reforms
Finance Commission is a constitutional body that gives suggestions on Centre-state financial relations. It suggests, among other things, the ratio in which tax is to be divided between the Centre and states for five years, beginning April 1, 2026.
In a parallel decision, the Union Cabinet has given its nod for the extension of the free ration scheme with a substantial outlay of Rs 24,000 crore. This extension, previously announced by Prime Minister Narendra Modi, was pending cabinet approval. The Pradhan Mantri Garib Kalyan Ann Yojana (PMGKAY), benefiting approximately 80 crore people, will now continue for the next five years, as affirmed by the Prime Minister during a public rally in Durg (Chhattisgarh).The free ration scheme, initiated during the COVID-19 pandemic to support individuals impacted by lockdowns, has proven to be a vital lifeline for millions. The government’s assurance that the extension will not impose significant fiscal strain during the fiscal years 2023-24 and 2024-25 provides a sense of financial sustainability in continuing this welfare initiative, as per PTI sources.
(With inputs from agencies)
