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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