Which of the following statements with regard to recommendations of the 15TH Finance Commission of India are correct?
- It has recommended grants of ₹4,800 crores from the year 2022–23 to the year 2025–26 for incentivizing States to enhance educational outcomes.
- 45% of the net proceeds of Union taxes are to be shared with States.
- ₹45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms.
- It reintroduced tax effort criteria to reward fiscal performance.
Select the correct answer using the code given below:
- I, II and III
- I, II and IV
- I, III and IV
- II, III and IV
Explanation
Statement I is correct
- 15th Finance Commission (2021-26) Chair: Mr. N. K. Singh) has recommended grants of Rs. 4,800 crores (Rs. 1,200 crore each year) from 2022-23 to 2025-26 for incentivising the States to enhance educational outcomes.
Statement II is incorrect
- XVFC has recommended maintaining the vertical devolution at 41 per cent.
Statement III is correct
- XVFC has recommended that Rs. 45,000 crores be kept as a performance-based incentive for all the States for carrying out agricultural reforms
Statement IV is correct
- XVFC has reintroduced the tax effort criterion to reward fiscal performance.
- Note: The 16th FC has introduced this parameter to account for the contribution to national GDP. This replaces the tax and fiscal efforts parameter used by the 15th FC, which rewarded states with higher tax-collection efficiency.
|
The criteria for horizontal devolution among States over the last six FCs |
||||||
| Criteria | 11th FC
2000-05 |
12th FC
2005-10 |
13th FC
2010-15 |
14th FC
2015-20 |
15th FC
2021-26 |
16th FC
(2026-31) |
| Income Distance | 62.5 | 50 |
47.5 |
50 | 45 | 42.5% |
| Population (1971 Census) | 10 | 25 | 25 | 17.5 | – | |
| Population (2011 Census) | – | – | – | 10 | 15 | 17.5% |
| Area | 7.5 | 10 | 10 | 15 | 15 | 10% |
| Forest cover | – | – | – | 7.5 | – | |
| Forest and ecology | – | – | – | – | 10 | 10% |
| Infrastructure index | 7.5 | – | – | – | – | |
| Fiscal discipline | 7.5 | 7.5 | 17.5 | – | – | |
| Demographic performance | – | – | – | – | 12.5 | 10% |
|
Tax effort |
5 | 7.5 | – | – |
2.5 |
|
|
Contribution to GDP |
– | – | – | – |
– |
10% |
| Total | 100 | 100 | 100 | 100 | 100 | 100 |
PMF Concept HackStatement II can be eliminated first using basic current-affairs awareness—the Fifteenth Finance Commission recommended 41% tax devolution, not 45%. Once Statement II is eliminated, options containing it — (a), (b), and (d) — are automatically removed. Thus, only option (c) is left → I, III and IV. |
