UPSC Prelims Practice Questions — Finance Commission triples grants to urban local governments

Q1. Which one of the following best describes the 'Urbanisation Premium Grant' recommended by the 16th Finance Commission for Urban Local Governments?

  • A. A performance-linked annual grant disbursed to municipal corporations on achieving property-tax buoyancy targets
  • B. A one-time grant to states to incentivise merger of peri-urban villages into urban local bodies and formulation of a rural-to-urban transition policy
  • C. A basic untied per-capita grant indexed to the floating urban population estimated by the 2026 SECC
  • D. A capital subsidy for cities with population between 10 lakh and 40 lakh to fund metro-rail last-mile connectivity

Q2. According to the 16th Finance Commission's report tabled in Parliament on 1 February 2026, the recommended grants to Urban Local Governments for 2026-31 represent approximately what percentage increase over the 15th Finance Commission's allocation for 2021-26?

  • A. About 130%
  • B. About 180%
  • C. About 230%
  • D. About 300%

Q3. The 16th Finance Commission, which recommended a tripling of grants to Urban Local Governments for 2026-31, is constituted by the President of India under which Article of the Constitution of India?

  • A. Article 243-I
  • B. Article 243-Y
  • C. Article 280
  • D. Article 282

Q4. Among the four components of the 16th Finance Commission's recommended grants to Urban Local Governments for 2026-31, which one constitutes the single largest share by value?

  • A. Performance-linked grants (about Rs 54,032 crore)
  • B. Special Infrastructure Grant for cities of 10–40 lakh population (about Rs 56,100 crore)
  • C. Basic (untied) grants (about Rs 2.32 lakh crore)
  • D. Urbanisation Premium Grant (about Rs 10,000 crore)