The Finance Commission is constituted every five years by the President of India. The 16th Finance Commission (chaired by Dr Arvind Panagariya) was constituted in 2024 for the period 2026-31. The 15th FC recommended 41% vertical devolution to states.
Previous Year Question — UPSC Prelims
With reference to the Finance Commission of India, which of the following statements is/are correct?
2024
Prelims
GS2
GS3
Question 1 (2024)
With reference to the Finance Commission of India, which of the following statements is/are correct?
Options
- A It is a constitutional body established under Article 280
- B It recommends the distribution of net proceeds of taxes between the Centre and States
- C Its recommendations are binding on the government
- D Both 1 and 2 only
Correct Answer
(D) Both 1 and 2 only
Explanation
The Finance Commission is a constitutional body under Article 280. It recommends distribution of tax proceeds between Centre and States (vertical devolution) and among States (horizontal devolution). However, its recommendations are advisory, not binding — the government may accept or reject them.
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