By signing in you confirm you are 18 or older, or have your parent’s or guardian’s consent.

UPSC Prelims 2025 GS Paper 1, question 66

Topic: Economy

Q66

Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct?

I. 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.

II. 45% of the net proceeds of Union taxes are to be shared with States.

III. ₹ 45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms.

IV. It reintroduced tax effort criteria to reward fiscal performance.

Select the correct answer using the code given below.

  1. (a) I, II and III
  2. (b) I, II and IV
  3. (c) I, III and IVCorrect answer
  4. (d) II, III and IV

Solution.

Answer: (c) I, III and IV

  1. Statement I is correct: the 15th Finance Commission recommended a grant of ₹4,8004,800 crores over four years (2022-23 to 2025-26) to incentivize States to enhance educational outcomes.
  2. Statement II is incorrect: the 15th Finance Commission recommended a vertical devolution of 41%41\% (not 45%45\%) of the divisible pool of Union taxes to the States.
  3. Statements III and IV are correct: the Commission recommended ₹45,00045,000 crores as performance-based incentives for States undertaking agricultural reforms and reintroduced the 'tax effort' criterion (with 2.5%2.5\% weight) in horizontal devolution.