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Q58 (CAPF/2024) Economy › Government Finance & Budget › Finance Commission transfers

Consider the following statements: 1. The 15th Finance Commission used fiscal effort as a criterion for horizontal devolution unlike the 14th Finance Commission 2. Both the 14th and the 15th Finance Commission used pre-2011 demographic variables as a criteria for horizontal devolution Which of the statements given above is/are correct?

Result
Your answer: —  Â·  Correct: A
Explanation

Statement 1 is correct as the 15th Finance Commission (XVFC) introduced 'Tax and fiscal effort' with a 2.5% weight to reward states with higher tax collection efficiency [2]. The 14th Finance Commission (FFC) did not include a specific 'fiscal effort' criterion, focusing instead on fiscal discipline through other mechanisms . Statement 2 is incorrect because the XVFC exclusively used 2011 Census data for population-based devolution (15% weight) to reflect contemporary demographic realities [2][3]. In contrast, the FFC used both 1971 population (17.5%) and 2011 population (10%) data . While the XVFC introduced 'Demographic Performance' to reward states that controlled fertility rates, it did not use pre-2011 population figures as a base criterion for horizontal devolution, unlike its predecessor [2][3].

Sources

  1. [2] https://www.pib.gov.in/PressReleasePage.aspx?PRID=1693868
  2. [3] https://www.indiabudget.gov.in/budget2015-2016/es2014-15/echapvol1-10.pdf
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SIMILAR QUESTIONS

IAS · 2023 · Q29 Relevance score: 3.61

Consider the following : 1. Demographic performance 2. Forest and ecology 3. Governance reforms 4. Stable government 5. Tax and fiscal efforts For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance?

IAS · 2025 · Q66 Relevance score: 1.75

Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct? I. It has recommended grants of ₹ 4,800 crores from the year 2022-23 to the year 2025-26 for incentivizing States to enhance educational outcomes. II. 45% of the net proceeds of Union taxes are to be shared with States. III. ₹ 45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms. IV. It reintroduced tax effort criteria to reward fiscal performance. Select the correct answer using the code given below.

IAS · 2015 · Q2 Relevance score: 1.17

With reference to the Fourteenth Finance Commission, which of the following statements is/are correct? 1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent. 2. It has made recommendations concerning sector-specific grants. Select the correct answer using the code given below.

NDA-I · 2013 · Q63 Relevance score: 0.69

Which of the following statements is/are correct? 1. The 14th Finance Commission was constituted under the Chairmanship of Shri Vijay Kelkar. 2. The 14th Finance Commission has been specifically asked also to recommend how non- priority PSUs be relinquished. Select the correct answer using the code given below.

CDS-II · 2006 · Q79 Relevance score: -0.14

Consider the following statement s about 11 Finance Commission 1. It was constituted to go recommendations on specified aspects of Centre - State fiscal relations during 2005- 2010. 2. It has recommended that the share of states in the net proceeds of share alike Central taxes shall be 50%. Which of the statements given above is/ are correct ?