Sixteenth Finance Commission (2026–31) Context: The Sixteenth Finance Commission (16th FC), chaired by Arvind Panagariya, submitted its final report covering the award period 2026–31. The Finance Commission of India is constituted under Article 280 of the Constitution to regulate fiscal relations between the Union and the States. Its task includes determining: Vertical devolution (Centre–State tax share), and Horizontal distribution formula (division among states). Vertical Tax Devolution – 41% The Commission retained the states’ share of the divisible central tax pool at 41%, continuing the arrangement recommended by the 15th FC. Revised Horizontal Distribution Formula Introduced a 10% weight for Contribution to GDP, calculated using the square root of Gross State Domestic Product (GSDP). This replaces the earlier Tax Effort parameter used in previous formulas. Grants to Local Governments – ₹7.9 Lakh Crore Significant allocations to rural and urban local bodies. 80% as unconditional basic grants. 20% tied to performance metrics. Disaster Management Funding – ₹2.04 Lakh Crore Recommended corpus for State Disaster Relief and Mitigation Funds. Cost-sharing pattern: 75:25 (Centre: State) for general states, 90:10 for Himalayan and North-Eastern states. Urbanisation Incentive Proposed a ₹10,000 crore “Urbanisation Premium”. Objective: Encourage integration of peri-urban villages into larger municipal bodies to support planned urban growth. Fiscal Consolidation Roadmap Centre to reduce fiscal deficit to 3.5% of GDP by 2030–31. States required to strictly maintain a 3% of GSDP deficit ceiling Current Facts Tamil Nadu launched HPV Vaccination campaign on a pilot basis in four districts Ariyalur, Perambalur, Dharmapuri and Tiruvannamalai. SEBI to Strengthen Market Surveillance Using AI Context: The Securities and Exchange Board of India (SEBI) has decided to intensify oversight of stock market manipulation and cyber-enabled financial frauds by leveraging advanced technology and Artificial Intelligence (AI). The move aims to detect irregular trading patterns, insider misconduct, and digital fraud more effectively.…
