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Arvind Panagariya Appointed Chairman of 16th Finance Commission

  • Published
    1st Jan, 2024
Context

Arvind Panagariya, the former Chairman of NITI Aayog, has recently been named as the head of the 16th Finance Commission.

Background
  • Arvind Panagariya served as the Chairman of NITI Aayog, a premier policy institution, contributing to the Indian government's policymaking process.
  • His diverse experience and expertise in economic matters make him a prominent figure for the role of heading the Finance Commission.
  • This significant appointment follows his departure from the think tank in August 2017 after a notable two-year tenure.

Finance Commission in India:

The Finance Commission is a constitutional body in India that plays a crucial role in fiscal federalism. Here are a few key pointers about the Finance Commission:

  1. Constitutional Mandate:

   - The Finance Commission is constituted under Article 280 of the Indian Constitution.

   - It is formed every five years or at such intervals as deemed necessary by the President.

  1. Objective:

   - The primary objective of the Finance Commission is to address the distribution of financial resources between the Centre and the States.

  1. Functions:

   - The Commission recommends the distribution of net proceeds of taxes between the Centre and the States.

   - It suggests principles governing the grants-in-aid to be given to the States out of the Consolidated Fund of India.

   - The Commission also evaluates the impact of the Centre's debt on the fiscal autonomy of States.

  1. Composition:

   - The Finance Commission comprises a Chairman and four other members.

   - Members are appointed by the President, and they bring diverse expertise, including economics, finance, and public administration.

Panagariya's Vision for India:

  • Earlier this year, Arvind Panagariya expressed optimism about India's economic trajectory.
  • He envisioned India becoming the world's third-largest economy by 2026.
  • According to his projections, India's GDP could reach $5 trillion in 2026 and $5.5 trillion in 2027, indicating a significant growth trajectory.
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