Published: 5th 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:
- 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.
- Objective:
- The primary objective of the Finance Commission is to address the distribution of financial resources between the Centre and the States.
- 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.
- 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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