Current Affairs - Finance - Discussion

The Sixteenth Finance Commission’s report covers the five-year award period from 2026 to 2031, guiding India’s fiscal framework for this duration. During this period, the Commission’s recommendations shape how tax revenue is shared between the Union and the States, how grants-in-aid are allocated, and how disaster risk financing mechanisms are structured. It plays a central role in strengthening fiscal federalism by defining criteria for vertical and horizontal devolution, local body financing, and performance-based grants. The report, prepared after extensive consultations and expert inputs, forms the foundation for fiscal planning and resource distribution for the entire award cycle.