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Q100 (CAPF/2024) Economy › Government Finance & Budget › Finance Commission transfers

Population of the year 2011 was first introduced in the tax devolution formula for sharing Union tax revenue with the States by (a) Thirteenth Finance Commission (b) Fifteenth Finance Commission (c) Fourteenth Finance Commission (d) Twelfth Finance Commission

Result
Your answer: —  Â·  Correct: C
Explanation

The Fourteenth Finance Commission (FFC), chaired by Dr. Y. V. Reddy, was the first to introduce the 2011 Census population data into the tax devolution formula for sharing Union tax revenue with the States [2][3]. Prior to this, Finance Commissions primarily relied on the 1971 Census data to determine population-based weightage, a practice intended to reward states that successfully implemented population control measures [1]. The FFC assigned a 17.5% weight to the 1971 population and introduced a 10% weight for the 2011 population to capture the 'demographic changes' and fiscal needs of states [2]. While the Fifteenth Finance Commission later shifted entirely to the 2011 Census for its formula, the initial introduction of this data point for horizontal devolution occurred under the Fourteenth Finance Commission [2].

Sources

  1. [2] https://www.indiabudget.gov.in/budget2015-2016/es2014-15/echapvol1-10.pdf
  2. [3] https://pib.gov.in/newsite/PrintRelease.aspx?relid=115810
  3. [1] https://www.downtoearth.org.in/economy/economics-of-population-61076
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