16th Finance Commission likely to visit Kerala by December

16th Finance Commission to visit Kerala by December 2024, with significant implications for state's fiscal allocations and financial resources.

Indications are that 16th Finance Commission headed by Arvind Panagariya will visit the State by December this year, Finance Minister K.N. Balagopal said on Friday (October 4, 2024).

Mr. Balagopal said that the recommendations of the Commission hold great significance given its role in distributing tax revenues among the Centre and the States. Kerala will start receiving its fiscal allocations as per the 16th Commission recommendations from April 1, 2026, the Minister said.

The State government is engaged in the process of presenting Kerala’s case strongly before the Commission, and secure the eligible share of financial resources, Mr. Balagopal said. The Commission, which has begun its work and has already visited six or seven States, is likely to visit Kerala by December, he said.

The Kerala government’s preparations with regard to the 16th Commission assumes significance against the backdrop of its grievances concerning the “disappointing’‘ 15th Commission awards and the State’s accusations against the Centre of imposing a financial embargo on it. Kerala had also moved the Supreme Court against the borrowing constraints placed on it. Mr. Balagopal noted on Friday that the stand taken by Kerala against the Centre’s discriminatory attitude in financial matters had garnered national attention.

In September this year, Kerala had organised a one-day Conclave of Finance Ministers in the context of the 16th Finance Commission. Attended by ministers from Karnataka, Telangana, Tamil Nadu and Punjab, the conclave expressed concern over the growing imbalances in Centre-State fiscal relations. The Ministers had also demanded equitable sharing of resources, a cap on the cesses/surcharges levied by the Centre and raising the states’ share of the divisible pool from 41% to 50%.

The 16th Commission is expected to submit its recommendations by October 31, 2025. The recommendations will cover a five-year award period beginning from April 1, 2026.