UPSC Prelims Practice Questions — RECOMMENDATION OF 15TH FINANCE COMMISSION

Q1. The 15th Finance Commission used how many distinct criteria for determining the inter-se (horizontal) distribution of the divisible pool among states?

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

Q2. With reference to the criteria and weights used by the 15th Finance Commission for horizontal devolution among states, consider the following: 1. Income Distance — 45% 2. Demographic Performance — 12.5% 3. Area — 10% 4. Tax and Fiscal Effort — 2.5% Which of the above are correctly matched?

1. Income Distance — 45%
2. Demographic Performance — 12.5%
3. Area — 10%
4. Tax and Fiscal Effort — 2.5%

• A. 1, 2 and 4
• B. 2, 3 and 4
• C. 1, 3 and 4
• D. 1, 2 and 3

Q3. Under which Article of the Constitution of India is the Finance Commission, including the 15th Finance Commission, constituted by the President?

• A. Article 270
• B. Article 275
• C. Article 280
• D. Article 281

Q4. With reference to the institutional framework of the 15th Finance Commission, consider the following statements: 1. It was constituted under Article 280 of the Constitution. 2. It was chaired by N.K. Singh. 3. It submitted a single consolidated report covering the entire period 2020-26. 4. Its recommendations are laid before Parliament under Article 281. Which of the above is/are NOT correct?

1. It was constituted under Article 280 of the Constitution.
2. It was chaired by N.K. Singh.
3. It submitted a single consolidated report covering the entire period 2020-26.
4. Its recommendations are laid before Parliament under Article 281.

• A. 3 only
• B. 1 and 3
• C. 3 and 4
• D. 2 only

Q5. Which is the nodal Union ministry for the release and administration of the 15th Finance Commission grants to Rural Local Bodies / Panchayati Raj Institutions?

• A. Ministry of Rural Development
• B. Ministry of Panchayati Raj
• C. Ministry of Finance
• D. Ministry of Home Affairs

Q6. With reference to the 15th Finance Commission grants to Rural Local Bodies, consider the following statements: 1. The inter-se distribution of grants among states is based 90% on population and 10% on area. 2. The grants are split equally into a Basic (untied) grant and a Tied grant. 3. The Tied grant must be spent on maintenance of rural roads and rural street lighting. 4. The total allocation for the 2021-26 period is about Rs 2,36,805 crore. Which of the statements given above are correct?

1. The inter-se distribution of grants among states is based 90% on population and 10% on area.
2. The grants are split equally into a Basic (untied) grant and a Tied grant.
3. The Tied grant must be spent on maintenance of rural roads and rural street lighting.
4. The total allocation for the 2021-26 period is about Rs 2,36,805 crore.

• A. 1, 2 and 4
• B. 2, 3 and 4
• C. 1, 3 and 4
• D. 1 and 2 only

Q7. The 15th Finance Commission recommended a non-lapsable Modernisation Fund for Defence and Internal Security (MFDIS). With reference to its sources of incremental funding, consider the following: 1. Transfers from the Consolidated Fund of India 2. Disinvestment proceeds of defence public sector enterprises 3. Proceeds from monetisation of surplus defence land 4. A dedicated cess levied on personal income tax earmarked for defence Which of the above are correctly identified as sources of the fund?

1. Transfers from the Consolidated Fund of India
2. Disinvestment proceeds of defence public sector enterprises
3. Proceeds from monetisation of surplus defence land
4. A dedicated cess levied on personal income tax earmarked for defence

• A. 1, 2 and 3
• B. 1, 3 and 4
• C. 2, 3 and 4
• D. 1 and 4 only

Q8. The Modernisation Fund for Defence and Internal Security (MFDIS) recommended by the 15th Finance Commission was to draw on how many distinct sources of incremental funding?

• A. Two
• B. Three
• C. Four
• D. Five

Q9. The 15th Finance Commission's sector-specific grants of about Rs 1.3 lakh crore for 2021-26 were earmarked for how many sectors?

• A. Six
• B. Seven
• C. Eight
• D. Nine

Q10. Which Finance Commission recommended the single largest increase in the states' share of the divisible pool, raising it sharply to 42% of the net proceeds of union taxes?

• A. 13th Finance Commission
• B. 14th Finance Commission
• C. 15th Finance Commission
• D. 12th Finance Commission

Q11. In the context of the 16th Finance Commission's decision (accepted by the Government) to retain it at 41%, the term 'vertical devolution' most precisely refers to which of the following?

• A. The share of the net proceeds of central taxes assigned to the states as a whole
• B. The distribution of the states' collective share among individual states inter se
• C. The grants-in-aid channelled from states down to local bodies
• D. The transfer of funds from the Consolidated Fund to the disaster relief funds

Q12. To strengthen fiscal consolidation and oversight of the FRBM framework, the 15th Finance Commission recommended setting up which independent body with an advisory role to assess the fiscal records of both the Centre and the states?

• A. A Fiscal Council
• B. The GST Council
• C. A Public Debt Management Agency
• D. An empowered NITI Aayog fiscal wing