Consider the following:
- Demographic performance
- Forest and ecology
- Governance reforms
- Stable government
- Tax and fiscal efforts
For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population, area and income distance?
Detailed Explanation:
Answer: Option 2 — Only three
The Fifteenth Finance Commission used six criteria for horizontal tax devolution: Income Distance (45%), Population (15%), Area (15%), Forest and Ecology (10%), Demographic Performance (12.5%), and Tax and Fiscal Efforts (2.5%). Apart from the three mentioned criteria (population, area, and income distance), only three from the given list were used: Demographic Performance, Forest and Ecology, and Tax and Fiscal Efforts. Governance reforms and stable government were not used as criteria for horizontal tax devolution.
📝 Short Notes: Fifteenth Finance Commission - Horizontal Devolution Criteria
| Criterion | Weight (%) | Rationale |
|---|---|---|
| Income Distance | 45% | Distance of state's per capita income from the highest income state |
| Population | 15% | Based on 2011 Census data |
| Area | 15% | Higher cost of service delivery in larger areas |
| Forest and Ecology | 10% | Share of dense forest cover; environmental conservation incentive |
| Demographic Performance | 12.5% | Rewards states for controlling population growth (1971 baseline) |
| Tax and Fiscal Efforts | 2.5% | Incentive for higher tax collection efficiency |
- Period: 2021-2026 (Award Period)
- Key Change: Demographic Performance replaced 'Demographic Change' used by 14th FC
- Not Included: Governance reforms, stable government, or political stability
Question 1 of 5 Taxation System
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