UPSC Prelims Practice Questions — India’s federalism is in need of a structural reset

Q1. Under the Constitution of India, the Finance Commission, which recommends the distribution of net proceeds of taxes between the Union and the States, is constituted by which of the following authorities?

  • A. The President of India
  • B. The Parliament of India by law
  • C. The Union Ministry of Finance on the advice of the Cabinet
  • D. The NITI Aayog Governing Council on the recommendation of the Inter-State Council

Q2. Who is the Chairman of the Sixteenth Finance Commission, which submitted its report for the award period 2026-27 to 2030-31?

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

Q3. In the context of the recommendations of the Finance Commission of India, the term 'vertical devolution' refers to which one of the following?

  • A. The sharing of the net proceeds of Union taxes between the Union Government and the States as a whole
  • B. The inter-se allocation of the States' share of Union taxes among individual States
  • C. The transfer of funds from State Governments to Panchayati Raj Institutions and Urban Local Bodies
  • D. The distribution of net market borrowing ceilings between the Centre and the States under the FRBM framework

Q4. How many criteria, in total, has the Sixteenth Finance Commission used for the horizontal devolution of the States' share of Union taxes for the award period 2026-31?

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