UPSC Prelims Practice Questions — RLB GRANTS RECOMMENDED BY SIXTEENTH FINANCE COMMISSION

Question 1

Consider the following statements regarding grants recommended for Rural Local Bodies (RLBs) by successive Central Finance Commissions:
1. The Sixteenth Finance Commission has recommended Rs. 4,35,236 crore for RLBs, an increase of about 84 per cent over the Rs. 2,36,805 crore recommended by the Fifteenth Finance Commission.
2. The award period of the Sixteenth Finance Commission runs from 2026-27 to 2030-31, and its RLB grants extend to all 28 States.
3. The per-capita RLB devolution of Rs. 176 for the period 2010-15 was the outcome of the recommendations of the Fourteenth Finance Commission.
Which of the statements given above is/are correct?

Accepted Answer

1 and 2 only

Answer

2 and 3 only

Answer

1 and 3 only

Answer

1, 2 and 3

Question 2

The Finance Commission whose recommendations raised per-capita devolution to Rural Local Bodies to Rs. 953, the highest so far, was chaired by:

Accepted Answer

Dr. Arvind Panagariya, who had earlier been Vice-Chairman of NITI Aayog

Answer

Shri N. K. Singh, who had earlier headed the Fifteenth Finance Commission

Answer

Dr. Y. V. Reddy, who had earlier been Governor of the Reserve Bank of India

Answer

Dr. Vijay Kelkar, who had earlier been Adviser to the Union Finance Minister

Question 3

Which one of the following statements about the trend in per-capita devolution to Rural Local Bodies through Central Finance Commission awards is correct?

Accepted Answer

The per-capita figure of Rs. 953 for 2026-31 is the highest so far, having stood at Rs. 176 for the period 2010-15.

Answer

Per-capita devolution to rural local bodies has increased at every successive Finance Commission award since the First Finance Commission.

Answer

The Thirteenth Finance Commission was the first Commission to recommend any grant whatsoever in favour of rural local bodies.

Answer

The entire increase in the rural award over the Fifteenth Finance Commission is accounted for by the performance grant component alone.

Question 4

Under the Sixteenth Finance Commission's award for Rural Local Bodies for 2026-31, how many rupees out of every 100 rupees of the grant are untied in character?

Accepted Answer

60

Answer

40

Answer

50

Answer

80

Question 5

In the design of the Sixteenth Finance Commission's Rural Local Body grants, the expression 'tied grant' denotes:

Accepted Answer

that half of the basic grant which must be applied to sanitation and solid waste management and/or water management, including operation and maintenance

Answer

that portion of the grant whose release is linked to the recipient panchayat placing its provisional and audited accounts in the public domain

Answer

that portion of the grant which the State must match, rupee for rupee, from its own Consolidated Fund before the Union releases it

Answer

that portion of the grant whose inter-se distribution among panchayats is determined by population and area in a fixed 90:10 ratio

Question 6

The untied portion of the Rural Local Body grants may be spent on location-specific needs falling within the subjects listed in the Eleventh Schedule of the Constitution. How many subjects are enumerated in that Schedule?

Accepted Answer

29

Answer

18

Answer

25

Answer

32

Question 7

Consider the following statements about the constitutional basis of Finance Commission support to Panchayats:
1. Article 280(3)(bb) makes it the duty of the Union Finance Commission to recommend measures needed to augment the Consolidated Fund of a State to supplement the resources of the Panchayats in the State, on the basis of the recommendations made by the Finance Commission of that State.
2. This duty was conferred on the Union Finance Commission by the Seventy-fourth Constitutional Amendment Act, 1992, which also inserted Part IX relating to the Panchayats.
3. Under Article 243-I, the Governor of a State constitutes a State Finance Commission to review the financial position of the Panchayats.
Which of the statements given above is/are correct?

Accepted Answer

1 and 3 only

Answer

1 and 2 only

Answer

2 and 3 only

Answer

1, 2 and 3

Question 8

With reference to the operational framework laid down for the Sixteenth Finance Commission's Rural Local Body grants for 2026-31, consider the following:
1. The Operational Guidelines governing these grants were issued by the Department of Expenditure, Ministry of Finance.
2. The whole of the performance grant component is untied in character.
3. Public disclosure of provisional and audited accounts by a local body is an entry-level condition for accessing the grants.
4. The tied component of the basic grant is earmarked for construction of rural roads and rural housing.
Which of the above is/are NOT correct?

Accepted Answer

4 only

Answer

1 and 3

Answer

2 and 4

Answer

1, 2 and 4

Question 9

With reference to Finance Commission grants for Rural Local Bodies in Chhattisgarh, consider the following:
1. Chhattisgarh's share in the Sixteenth Finance Commission's Rural Local Body grants for 2026-31 is Rs. 11,664 crore.
2. Chhattisgarh's allocation under the Fifteenth Finance Commission's Rural Local Body grants for 2021-26 was Rs. 5,669 crore.
3. Chhattisgarh is among the 28 States for which the Sixteenth Finance Commission has recommended Rural Local Body grants.
4. Chhattisgarh drew down its entire Fifteenth Finance Commission Rural Local Body allocation, with no part of it remaining unreleased.
Which of the above is/are correctly identified?

Accepted Answer

1, 2 and 3 only

Answer

1 and 3 only

Answer

2 and 4 only

Answer

1, 2, 3 and 4

Question 10

Under Article 280(1) of the Constitution, the authority that actually constitutes a Finance Commission and appoints its Chairman and other members is:

Accepted Answer

the President of India, by order made at the expiration of every fifth year or earlier

Answer

the Union Cabinet, acting on the Terms of Reference moved by the Union Finance Minister

Answer

Parliament, by a resolution adopted under the Finance Commission (Miscellaneous Provisions) Act, 1951

Answer

the Ministry of Finance, on the recommendation of the Governing Council of NITI Aayog

Question 11

The Operational Guidelines for implementing the Sixteenth Finance Commission's grants to Rural Local Bodies for 2026-31 were issued under the authority of:

Accepted Answer

the Department of Expenditure, Ministry of Finance

Answer

the Ministry of Panchayati Raj, Government of India

Answer

the Department of Drinking Water and Sanitation, Ministry of Jal Shakti

Answer

the Department of Economic Affairs, Ministry of Finance

UPSC Prelims Practice Questions — RLB GRANTS RECOMMENDED BY SIXTEENTH FINANCE COMMISSION

Q2. The Finance Commission whose recommendations raised per-capita devolution to Rural Local Bodies to Rs. 953, the highest so far, was chaired by:

Q3. Which one of the following statements about the trend in per-capita devolution to Rural Local Bodies through Central Finance Commission awards is correct?

Q4. Under the Sixteenth Finance Commission's award for Rural Local Bodies for 2026-31, how many rupees out of every 100 rupees of the grant are untied in character?

Q5. In the design of the Sixteenth Finance Commission's Rural Local Body grants, the expression 'tied grant' denotes:

Q6. The untied portion of the Rural Local Body grants may be spent on location-specific needs falling within the subjects listed in the Eleventh Schedule of the Constitution. How many subjects are enumerated in that Schedule?

Q10. Under Article 280(1) of the Constitution, the authority that actually constitutes a Finance Commission and appoints its Chairman and other members is:

Q11. The Operational Guidelines for implementing the Sixteenth Finance Commission's grants to Rural Local Bodies for 2026-31 were issued under the authority of: