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Q53 (CDS-II/2018) Economy › Government Finance & Budget › Finance Commission transfers Answer Verified

The Fourteenth Finance Commission assigned different weights to the following parameters for distribution of tax proceeds to the States : 1. Income distance 2. Population 3. Demographic changes 4. Area Arrange the aforesaid parameters in descending order in terms of their weights.

Result
Your answer: —  Â·  Correct: B
Explanation

The Fourteenth Finance Commission (FFC) recommended specific weights for horizontal devolution of tax proceeds among states. According to the official criteria, Income Distance was assigned the highest weight of 50% [2]. This was followed by Population (based on the 1971 Census), which was assigned a weight of 17.5% [2]. The weight for Area was set at 15% [2]. Finally, Demographic Changes (captured through the 2011 Census population) was assigned a weight of 10% [2]. Therefore, the descending order of the parameters by weight is Income Distance (50%), Population (17.5%), Area (15%), and Demographic Changes (10%). This corresponds to the sequence 1-2-4-3. While some sources mention a 45% weight for income distance, that specifically pertains to the Fifteenth Finance Commission's adjustments; the Fourteenth Commission maintained 50% for income distance [2].

Sources

  1. [2] https://en.wikipedia.org/wiki/Fourteenth_Finance_Commission
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SIMILAR QUESTIONS

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