16th Finance Commission report
Why in news?
The 16th Finance Commission of India, led by Chairman Dr. Arvind Panagariya, submitted its report for the period 2026-31 to President Droupadi Murmu on November 17, 2025.
Key facts about report
- The report includes recommendations on vertical and horizontal distribution of tax revenues between the Union and the States.
- It also covers grants-in-aid, disaster management financing, and fiscal performance measures for States.
- The report is presented in two volumes: Volume I with recommendations per Terms of Reference and Volume II with detailed annexures.
- Originally due by October 31, 2025, the Commission was granted a one-month extension.
- The report will be tabled in Parliament in the Winter Session starting December 1, 2025, by the Union Finance Minister.
- The formula for distribution considers population (based on 2011 figures), area, demographic performance, fiscal effort, income distance, and forest cover.
- Recommendations include revenue augmentation and financing for local governments (municipal bodies).
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