The government is working on setting up the 16th Finance Commission over the next few weeks and is debating the terms of reference at a time when several states are facing financial stress and the Centre is worried over the impact of the spate of freebies announced across the country without factoring in the fiscal situation and the impact in the long run. While the 15th Finance Commission's award is valid up to the 2025-26 financial year, the Centre is keen to ensure that the next panel gets adequate time to deal with the issues and submit its recommendations. The last commission was impacted by the pandemic, which resulted in two sets of recommendations - one for FY 2020-21 and the second for 2021-26. Besides, Jammu & Kashmir and Ladakh were carved out as separate union territories during the tenure of the last Finance Commission.