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Q58 (IAS/2012) Economy › Government Finance & Budget › Finance Commission transfers Answer Verified

Which of the following is/are among the noticeable feature of the recommendations of the Thirteenth Finance Commission? 1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design 2. A design for the creation of lakhs of jobs in the next ten years in consonance with India’s demographic dividend 3. Devolution of a specified share of central taxes to local bodies as grants Select the correct answer using the codes given below:

Result
Your answer: —  ·  Correct: C
Explanation

The Thirteenth Finance Commission (2010–2015) proposed a 'Grand Bargain' for the implementation of the Goods and Services Tax (GST). This included a specific model design and a compensation package of ₹50,000 crore, which was explicitly linked to states adhering to the proposed GST design [1]. Regarding local bodies, the Commission introduced a significant shift by recommending the devolution of a specified share of the divisible pool of central taxes as grants, rather than just lump-sum amounts [2]. Specifically, it recommended a basic grant and a performance grant for local bodies, calculated as a percentage of the previous year's divisible pool. There was no specific recommendation or design for the creation of 'lakhs of jobs' based on the demographic dividend within the Commission's core fiscal transfer mandates, making statement 2 incorrect. Thus, only statements 1 and 3 are accurate features of its recommendations.

Sources

  1. [1] https://fincomindia.nic.in/asset/pdf/commission-reports/13fcreng.pdf
  2. [2] https://fincomindia.nic.in/asset/doc/commission-reports/13th-FC/english/contents.pdf
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