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Q12 (CDS-II/2007) Polity & Governance › Constitutional & Statutory Bodies › Finance Commission of India Answer Verified

Financial distribution between the Union and the State takes place on the basis of the recommendat ions of which one of the following ?

Result
Your answer: —  Â·  Correct: D
Explanation

The financial distribution between the Union and the States is primarily governed by the recommendations of the Finance Commission. Article 280 of the Indian Constitution mandates the President to constitute a Finance Commission every five years as a quasi-judicial body [c1][c2]. Its core functions include recommending the distribution of net proceeds of taxes between the Union and the States (vertical devolution) and the allocation among the States themselves (horizontal devolution) [c4][t5]. Additionally, it defines the principles governing grants-in-aid to the States from the Consolidated Fund of India [c2][c4]. While the Planning Commission historically handled plan-based resource allocation and the National Development Council provided overall guidance, the Finance Commission remains the constitutional authority for statutory financial transfers [t4][t9]. The 15th Finance Commission recently recommended a 41% share of central taxes for states, reinforcing its central role in shaping India's fiscal federalism [t5].

Sources

  1. [1] Introduction to the Constitution of India, D. D. Basu (26th ed.). > Chapter 25: DISTRIBUTION OF FINANCIAL POWERS > The States, similarly, have their receipts from- > p. 387
  2. [2] Laxmikanth, M. Indian Polity. 7th ed., McGraw Hill. > Chapter 15: Centre State Relations > I I Finance Commission > p. 156
  3. [3] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > 1. Finance Commission Grants > p. 182
  4. [4] https://fincomindia.nic.in/asset/doc/commission-reports/12th-FC/reports/eng/Chapter%2002.pdf
  5. [5] https://www.oecd.org/content/dam/oecd/en/topics/policy-sub-issues/fiscal-federalism-network/oecd-india-16th-fc-consultation-summary.pdf
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SIMILAR QUESTIONS

CDS-I · 2008 · Q89 Relevance score: 6.86

Financial distribution between the Union and the State takes place on the basis of the recommendations of which one of the following ?

CAPF · 2008 · Q35 Relevance score: -1.29

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Which of the following bodies is responsible for the distribution of revenues between the Centre and the States?

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Consider the following statements: The State government shall appoint a fincance commission to review the financial position of the Panchayats and to make recommendations as to 1. the distribution between the State and Panchayats of the net proceeds of taxes, tolls and fees leviable by the states. 2. the determinates of the taxes duteis, tolls and fees which may be assigned to the panchayats. 3. the principles that will determine grant-in- aid to the Panchayats. Which of the statement(s) given above is/are correct?

IAS · 2000 · Q10 Relevance score: -4.34

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