The most recent Finance Commission was constituted on 31 December 2023 and is chaired by Arvind Panagariya former Vice Chairman of NITI Aayog.

Horizontal imbalances among state governments result from differing historical backgrounds or resource endowments and can widen over time.

[9][10][11][12] However Ajay Narayan Jha was appointed replacing Shaktikanta Das who resigned from the commission to serve as the governor of the Reserve Bank of India.

[7][8] The main tasks of the commission were to "strengthen cooperative federalism, improve the quality of public spending and help protect fiscal stability".

[15][16] First Finance Commission proposed, the percentage share of net proceeds of income-tax assigned to the states should be following manner:[17]