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Q10 (IAS/2000) Polity & Governance › Constitutional & Statutory Bodies › Finance Commission of India Answer Verified

The primary function of the Finance Commission in India is to

Result
Your answer: —  Â·  Correct: A
Explanation

The Constitutionally mandated primary role of the Finance Commission is to recommend how the net proceeds of taxes should be distributed between the Centre and the States (vertical devolution) and how the States’ shares should be allocated among themselves (horizontal devolution). This duty — including recommending principles for grants‑in‑aid to States and measures to augment state finances — is explicitly set out as the Commission’s main terms of reference under Article 280, and is repeatedly listed as the first and foremost function in authoritative descriptions of the Commission’s remit [1]. Official accounts of Finance Commissions likewise state that resolving vertical and horizontal fiscal imbalances by tax devolution and grants is the Commission’s core purpose [2].

Sources

  1. [1] Indian Economy, Vivek Singh (7th ed. 2023-24) > Chapter 4: Government Budgeting > 1. Finance Commission Grants > p. 182
  2. [2] https://fincomindia.nic.in/asset/doc/commission-reports/15th-FC/reports/studies/Resource%20sharing%20between%20Centre%20and%20States%20and%20allocation%20across%20States.pdf
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SIMILAR QUESTIONS

IAS · 2003 · Q73 Relevance score: 3.48

Consider the following statements: The function (S) of the Finance Commission is/are 1. to allow the withdrawal of money out of the Consolidated Fund of India. 2. to allocate between the States the shares of proceeds of taxes. 3. to consider applications for grants-in-aid from States. 4. to supervise and report on whether the Union and State governments are levying taxes in accordance with the budgetary provisions. Which of these statements is/are correct?

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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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CAPF · 2008 · Q35 Relevance score: 0.08

Consider the following statements : 1. No money bill can be introduced in the Parliament without the recommendation of the President of India. 2. The Prime Minister appoints Finance Commission for distribution of taxes between the Union and the States. Which of the statements given above is/are correct ?

CDS-I · 2008 · Q89 Relevance score: -0.14

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