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.
- A.I, II and III
- B.I, II and IV
- C.I, III and IV
- D.II, III and IV
▶ Answer & Explanation
Correct answer: C. I, III and IV
The 15th Finance Commission recommended specific grants for improving educational outcomes. It also proposed a tax devolution of 41% to states, a reduction from the 14th FC's 42%, to account for the newly formed Union Territories of Jammu & Kashmir and Ladakh. While the commission emphasized reforms, the specific figure of ₹45,000 crores for agricultural reforms as a performance-based incentive was a key recommendation. Furthermore, the commission did reintroduce the 'tax effort' criterion, which measures a state's ability to raise its own revenue, to encourage fiscal responsibility.
Source: UPSC gs1 2025