UPSC Previous Year Question | Prelims GS | 2025

Which of the following statements with regard to the 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 2025-26 for incentivizing States to enhance educational outcomes. II. 45% of the net proceeds of Union taxes should be shared with the States. III. ₹45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms. IV. It reintroduced the tax effort criteria to reward fiscal performance. Select the correct answer using the code given below.

  1. I, II and III
  2. I, II and IV
  3. I, III and IV
  4. II, III and IV

Answer

Correct Answer

I, III and IV

Explanation

The 15th Finance Commission recommended ₹4,800 crore grants (2022-23 to 2025-26) for incentivizing states on education outcomes (I correct), earmarked ₹45,000 crore as performance-based incentives for agricultural reforms (III correct), and reintroduced tax effort as a criterion in its devolution formula to reward fiscal performance (IV correct). However, it recommended States' share of the divisible pool at 41% (not 45%), making II incorrect.

Topics: economy, finance commission, fiscal federalism