UPSC Prelims Practice Questions — GSDP share as criterion for central-State transfers

Q1. With reference to the devolution formula recommended by the 16th Finance Commission (2026-31) as compared with that of the 15th Finance Commission, consider the following statements. Which of the statements given above is/are correct?

  1. The income distance criterion has been assigned a lower weight under the 16th Finance Commission than under the 15th Finance Commission.
  2. The 16th Finance Commission introduced 'Contribution to GDP' as a new criterion, replacing the 'Tax and Fiscal Efforts' criterion of the 15th Finance Commission.
  3. The 16th Finance Commission raised the weight assigned to Area while reducing the weight assigned to Population, relative to the 15th Finance Commission.
  • A. 1 only
  • B. 1 and 2 only
  • C. 2 and 3 only
  • D. 1, 2 and 3

Q2. How many distinct criteria are used by the 16th Finance Commission (2026-31) in its formula for horizontal devolution of central taxes among States?

  • A. Five
  • B. Six
  • C. Seven
  • D. Four

Q3. Under whose chairmanship was the report of the 16th Finance Commission, covering the award period 2026-31, finalised and submitted?

  • A. Dr. Arvind Panagariya
  • B. N. K. Singh
  • C. Dr. Y. V. Reddy
  • D. Dr. Vijay Kelkar

Q4. In the devolution formula of the 16th Finance Commission (2026-31), which single criterion carries the highest weight?

  • A. Income Distance
  • B. Population (2011 Census)
  • C. Contribution to GDP
  • D. Demographic Performance

Q5. Consider the following parameters with reference to the horizontal tax-devolution formula of the 16th Finance Commission (2026-31). Which of the above is/are correctly identified as criteria used by the 16th Finance Commission?

  1. Forest and Ecology
  2. Tax and Fiscal Efforts
  3. Contribution to GDP
  4. Demographic Performance
  • A. 1 and 2 only
  • B. 1, 3 and 4 only
  • C. 2 and 4 only
  • D. 3 only