Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct?
- I.It has recommended grants of ₹ 4,800 crores from the year 2022-23 to the year 2025-26 for incentivizing States to enhance educational outcomes.
- II.45% of the net proceeds of Union taxes are to be shared with States.
- III.₹ 45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms.
- IV.It reintroduced tax effort criteria to reward fiscal performance.
Select the correct answer using the code given below.
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Answer: C. Statement I is correct: the 15th Finance Commission recommended ₹4,800 crore (2022-23 to 2025-26) to incentivise States to improve educational outcomes. Statement II is wrong: the States' share of the divisible pool is 41%, not 45%. Statement III is correct: ₹45,000 crore was set aside as performance-based incentives for agricultural reforms. Statement IV is correct: it reintroduced 'tax effort' (weight 2.5%) as a criterion in horizontal devolution. So I, III and IV.
Watch for: 42% (14th FC) and 41% (15th FC) get mixed up, and here 45% is used to mislead.
Why the other options are wrong
- A. Statement II is wrong (the share is 41%), so I, II and III is wrong.
- B. Statement II is wrong (the share is 41%), so I, II and IV is wrong.
- D. Statement II is wrong (the share is 41%), so II, III and IV is wrong.
Source to check: Report of the Fifteenth Finance Commission for 2021-26 (Finance Commission website); PIB release on the report, February 2021
Answer from the official UPSC key. Written and fact-checked by AI against the official key. Spotted a mistake? Report it.