UPSC Prelims Practice Questions — A cautious nudge

Q1. Within the Union Government, which one of the following is the nodal department for matters relating to the Finance Commission, including the tabling of its report in Parliament?

  • A. Department of Revenue, Ministry of Finance
  • B. Department of Economic Affairs, Ministry of Finance
  • C. Department of Expenditure, Ministry of Finance
  • D. Department of Investment and Public Asset Management, Ministry of Finance

Q2. Consider the following statements regarding the criteria used by the Sixteenth Finance Commission (FC-16) for horizontal devolution among States for the award period 2026-31: 1. Income distance has been assigned a weight of 42.5%. 2. Tax effort has been retained with a weight of 2.5%. 3. Contribution to GDP has been introduced with a weight of 10%. 4. Forest and ecology has been assigned a weight of 10%. Which of the above statements is/are NOT correct?

  1. Income distance has been assigned a weight of 42.5%.
  2. Tax effort has been retained with a weight of 2.5%.
  3. Contribution to GDP has been introduced with a weight of 10%.
  4. Forest and ecology has been assigned a weight of 10%.
  • A. 2 only
  • B. 1 and 3 only
  • C. 2 and 4 only
  • D. 1, 3 and 4 only

Q3. Who chairs the Sixteenth Finance Commission, whose report for the award period 2026-31 was submitted to the President in November 2025?

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

Q4. In the context of recommendations of the Finance Commission, the term 'divisible pool' refers to which one of the following?

  • A. The gross tax revenue of the Union Government, including both tax and non-tax receipts, before any deductions
  • B. The net proceeds of Union taxes shareable with States, excluding cesses, surcharges and cost of collection
  • C. The pooled GST revenue collected by the Centre and the States that is apportioned by the GST Council
  • D. The aggregate of Central grants-in-aid given to States under Article 275 of the Constitution

Q5. With reference to the Sixteenth Finance Commission (FC-16, 2026-31) vis-à-vis the Fifteenth Finance Commission (FC-15, 2021-26), consider the following statements: 1. FC-16 has reduced the vertical share of States in the divisible pool from 42% to 41%. 2. FC-16 has increased the weight assigned to the 2011 Census population from 15% to 17.5%. 3. FC-16 has replaced the 'tax effort' criterion of FC-15 with a new 'contribution to GDP' criterion. Which of the statements given above is/are correct?

  1. FC-16 has reduced the vertical share of States in the divisible pool from 42% to 41%.
  2. FC-16 has increased the weight assigned to the 2011 Census population from 15% to 17.5%.
  3. FC-16 has replaced the 'tax effort' criterion of FC-15 with a new 'contribution to GDP' criterion.
  • A. 1 only
  • B. 2 and 3 only
  • C. 1 and 3 only
  • D. 1, 2 and 3