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.
Detailed Explanation:
Correct Answer: ✅ Option 3 (I, III and IV)
The Fifteenth Finance Commission recommended several performance-based grants and incentives to improve governance, education, agriculture, and fiscal discipline among States.
✅ Statement I is Correct: The Commission recommended ₹4,800 crore during 2022–23 to 2025–26 to incentivize States for improving educational outcomes.
❌ Statement II is Incorrect: The Commission recommended that 41% of the net proceeds of Union taxes be devolved to States, not 45%.
✅ Statement III is Correct: A ₹45,000 crore performance-based incentive fund was proposed to encourage States to undertake agricultural reforms.
✅ Statement IV is Correct: The Commission reintroduced the Tax Effort Criterion to reward States that mobilize their own tax revenues more effectively relative to their economic capacity.
Short Notes: Fifteenth Finance Commission
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The 15th Finance Commission was chaired by N. K. Singh.
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Its recommendations covered the period 2021–26.
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It recommended 41% tax devolution to States.
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Introduced performance-based incentives in sectors like education, agriculture, and power reforms.
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Recommended ₹45,000 crore for agricultural reform-linked incentives.
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Reintroduced the Tax Effort criterion in the devolution formula.
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Finance Commissions are constituted under Article 280 of the Indian Constitution.
Question 1 of 3 Finance Commission
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With Reference to the Fourteenth Finance Commission, which of the following statement...