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Arvind Panagariya Appointed as New Finance Commission Head

Arvind Panagariya Appointed as New Finance Commission Head

Arvind Panagariya’s appointment as the new Finance Commission head, tasked with recommending federal tax-sharing formulas, and understanding the implications for India’s fiscal landscape in the coming years.

The central government has announced the appointment of Arvind Panagariya as the chairman of the new Finance Commission. This crucial body is tasked with recommending the formula for the equitable distribution of federal taxes between the union and state governments. Arvind Panagariya, an Indian-born, US-educated economist, brings a wealth of experience to this role, having previously served as the head of the government’s main policy think-tank.

Arvind Panagariya: A Brief Background

Arvind Panagariya, a distinguished economist, resigned from the government’s main policy think-tank in 2017. His appointment as the head of the newly created body, replacing the former planning commission, marked a strategic move by Prime Minister Narendra Modi. This transition aimed to shift away from Soviet-style five-year economic plans to more contemporary and flexible approaches.

Arvind Panagariya: Leading the Sixteenth Finance Commission Charge

In a strategic move, the Modi government has appointed the esteemed Arvind Panagariya, a distinguished figure in economics and academia, as the Chairman of the Sixteenth Finance Commission. This pivotal body is tasked with recommending the tax revenue sharing formula between the Centre and the States for the upcoming five-year period starting April 2026.

A Reputed Economist Takes the Helm

Arvind Panagariya, a former vice chairman of the Niti Aayog and a professor at Columbia University, has been entrusted with leading the Commission. His appointment, as per the Finance Ministry’s notification following President Draupadi Murmu’s order, marks a significant move in economic leadership.

Terms of Reference and Noteworthy Appointments

The Cabinet’s approval on November 29 solidified the terms of reference for the Commission, further emphasizing its importance. The order also introduced Ritvik Ranjanam Pandey, a former joint secretary in the Department of Revenue, as the secretary of the panel.

Tenure and Responsibilities

The Commission’s members, including the Chairman, will hold office until the submission of the report or October 31, 2025, whichever comes earlier. This underscores the time-sensitive nature of the Commission’s responsibilities.

Delving into Arvind Panagariya’s Profile

To comprehend the significance of this appointment, here are five key aspects to know about Arvind Panagariya:

1. Academic Background

Born on September 30, 1952, Panagariya is an alumnus of the University of Rajasthan. His academic journey includes earning a Doctor of Philosophy (PhD) from Princeton University, showcasing a strong foundation in economic scholarship.

2. Extensive International Experience

Panagariya’s illustrious career includes being a former chief economist at the Asian Development Bank. His contributions also extend to renowned international organizations such as the World Trade Organisation, International Monetary Fund, and World Bank. Additionally, he served as a professor of economics at Columbia University in New York.

3. Niti Aayog Stint

In 2015, the Modi government selected Panagariya to serve as the vice chairman of the National Institution for Transforming India (NITI) Aayog. This marked a transformative phase as NITI Aayog replaced the longstanding Planning Commission.

4. Transition to Academia

In 2017, Panagariya made a significant decision to step down from his post and return to academics. Citing the end of his leave at Columbia University, he expressed his intention to rejoin the academic sphere. This move was supported by the Prime Minister.

5. Vision for India’s Economic Future

Panagariya’s foresight extends to India’s economic trajectory. In a recent statement, he predicted that India would become the world’s third-largest economy by 2026, with a GDP touching $5 trillion. His optimism stems from the country’s current growth rate, suggesting an accelerated timeline compared to prevailing forecasts.

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The Finance Commission’s Mandate

The Finance Commission is established every five years to recommend the formula for the allocation of taxes between the union and state governments. Its overarching goal is to provide a framework that ensures fiscal balance and facilitates optimal resource utilization. Presently, India allocates 42% of federal taxes to states.

Future Projections

According to the government order, the Finance Commission, under Arvind Panagariya’s leadership, is expected to submit its report by October 31, 2025. This report will cover five years, commencing on April 1, 2026, outlining the proposed tax-sharing formula and other key recommendations concerning public finances.

Frequently Asked Questions

Q1: What is the role of the Finance Commission?

A1: The Finance Commission is tasked with recommending the formula for the distribution of federal taxes between the union and state governments, promoting fiscal stability and equitable resource allocation.

Q2: Who is Arvind Panagariya?

A2: Arvind Panagariya is an Indian-born, US-educated economist appointed as the chairman of the new Finance Commission, bringing extensive expertise to the role.

Q3: How often is the Finance Commission established?

A3: The Finance Commission is set up every five years to review and recommend the tax-sharing formula between the central and state governments.


Arvind Panagariya’s appointment as the head of the Finance Commission signals a strategic move towards modernizing economic planning in India. With his background and experience, there are high expectations for the commission’s recommendations, which will play a pivotal role in shaping the fiscal landscape for the next five years.

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