Finance Commission Transfers and Equity Issues
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Questions and Answers

What is the main focus of the Finance Commission when recommending transfers?

  • Net divisible pool calculation
  • Horizontal equity
  • Vertical equity
  • State governments' needs (correct)

    • What does the net divisible pool (NDP) calculation exclude?

  • Cesses and surcharges (correct)
  • Central taxes
  • Non-tax revenue
  • Gross tax revenues

    • What was a significant change in the divisible pool post a constitutional amendment in 2000?

  • Exclusion of state taxes
  • Introduction of GST
  • Inclusion of all taxes of the union (correct)
  • Reduction in central government's share

    • What was a key factor that influenced the formation of the Fifteenth Finance Commission?

    <p>Abolition of Planning Commission</p> Signup and view all the answers

    How did the vertical devolution share recommended by the Fifteenth Finance Commission for 2021-26 compare to that recommended by the 14th Finance Commission for 2015-20?

    <p>It was lower</p> Signup and view all the answers

    What is the main responsibility of the Finance Commission?

    <p>Evaluating the state of finances of the union and state governments</p> Signup and view all the answers

    What does vertical equity refer to in the context of the Finance Commission's work?

    <p>Deciding about the share of all states in the revenue collected by the centre</p> Signup and view all the answers

    How is income distance used in the distribution of central taxes among states for 2021-26?

    <p>To determine a state's income compared to the state with the highest income</p> Signup and view all the answers

    Which commission recommended that the share of states in central taxes for 2021-26 should be 41%?

    <p>Fifteenth Finance Commission</p> Signup and view all the answers

    What is the purpose of levying a cess on luxury goods and demerit goods?

    <p>Providing compensation to states</p> Signup and view all the answers

    What does SGST stand for in relation to tax collection by states?

    <p>State Goods and Services Tax</p> Signup and view all the answers

    What is the purpose of the Finance Commission as per the Indian Constitution?

    <p>To recommend sharing of taxes between the union and state governments</p> Signup and view all the answers

    Which of the following statements about the Finance Commission is true?

    <p>It recommends grants-in-aid to states in need of assistance.</p> Signup and view all the answers

    In what way does the Finance Commission contribute to maintaining fiscal federalism in India?

    <p>By recommending measures to augment the consolidated fund of a state.</p> Signup and view all the answers

    What is one of the key functions of the Finance Commission?

    <p>Deciding on the distribution of net proceeds of taxes between union and states</p> Signup and view all the answers

    Which body makes recommendations to the President on measures needed to augment a state's consolidated fund?

    <p>Finance Commission</p> Signup and view all the answers

    How does the Finance Commission assist in distributing resources between the centre and states?

    <p>By recommending the sharing of taxes between the centre and states</p> Signup and view all the answers

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