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Fiscal Policy & Revenue (Part – V)

📆 October 15, 2024

Total Questions: 50

41. Which of the following is/are among the noticeable features of the recommendations of the Thirteenth Finance Commission: [I.A.S. (Pre) 2012]

1. A design for the Goods and Services Tax, and a compensation package linked to adherence to the proposed design

2. A design for the creation of lakhs of jobs in the next ten years in consonance with India's demographic dividend

3. Devolution of a specified share of central taxes to local bodies as grants

Select the correct answer using the codes given below:

Correct Answer: (c) 1 and 3 only
Solution:In the recommendations of 13th Finance Commssion, a design for the Goods and Services Tax with a compensation package linked to adherence to the proposed design and devolution of a specified share of central taxes to local bodies as grants were included while design for the creation of lakhs of jobs in the next ten years in consonance with India's demographic dividend was not included in the recommendations of its report.

42. Who is the Chairman of the 10th Finance Commission? [M.P. P.C.S. (Pre) 1993, Uttarakhand U.D.A.\L.D.A. (Pre) 2003]

Correct Answer: (a) K.C. Pant
Solution:Chairman of the 10th Finance Commission was K.C. Pant. The First Finance Commission was constituted vide presidential order dated 22.11.1951 under the chairmanship of Shri K.C. Neogy. So far 16th Finance Commissions have been appointed which as follows:
Finance CommissionYear of EstablishmentChairmanOperational Duration
First1951K.C. Neogy1952-57
Second1956K. Santhanam1957-62
Third1960A.K. Chanda1962-66
Fourth1964P.V. Rajamannar1966-69
Fifth1968Mahaveer Tyagi1969-74
Sixth1972K. Brahmananda Reddy1974-79
Seventh1977J.M. Shelat1979-84
Eighth1983Y.B. Chavan1984-89
Ninth1987N.K.P. Salve1989-95
Tenth1992K.C. Pant1995-2000
Eleventh1998A.M. Khusro2000-05
Twelfth2002C. Rangarajan2005-10
Thirteenth2007Vijay L. Kelkar2010-15
Fourteenth2013Y.V. Reddy2015-20
Fifteenth2017N.K. Singh2020-26
Sixteenth2023Arvind Panagariya2026-31

43. Who among the following was the Chairman of the Firs Finance Commission of India? [U.P.P.C.S. (Pre) 2021]

Correct Answer: (b) Shri K.C. Neogy
Solution:Chairman of the 10th Finance Commission was K.C. Pant. The First Finance Commission was constituted vide presidential order dated 22.11.1951 under the chairmanship of Shri K.C. Neogy. So far 16th Finance Commissions have been appointed which as follows:
Finance CommissionYear of EstablishmentChairmanOperational Duration
First1951K.C. Neogy1952-57
Second1956K. Santhanam1957-62
Third1960A.K. Chanda1962-66
Fourth1964P.V. Rajamannar1966-69
Fifth1968Mahaveer Tyagi1969-74
Sixth1972K. Brahmananda Reddy1974-79
Seventh1977J.M. Shelat1979-84
Eighth1983Y.B. Chavan1984-89
Ninth1987N.K.P. Salve1989-95
Tenth1992K.C. Pant1995-2000
Eleventh1998A.M. Khusro2000-05
Twelfth2002C. Rangarajan2005-10
Thirteenth2007Vijay L. Kelkar2010-15
Fourteenth2013Y.V. Reddy2015-20
Fifteenth2017N.K. Singh2020-26
Sixteenth2023Arvind Panagariya2026-31

44. Match List-I with List-II and select the correct answer by using the code given below: [U.P.P.C.S. (Mains) 2007]

List-I (Finance Commission)List-II (Chairman)
A.  9th1. N.K.P. Salve
B.  10th2. C. Rangarajan
C.  11th3. K.C. Pant
 D. 12th4. A.M. Khusro

Codes :

OptionsABCD
(a)1342
(b)1243
(c)2341
(d)1234
Correct Answer: (a)
Solution:Chairman of the 10th Finance Commission was K.C. Pant. The First Finance Commission was constituted vide presidential order dated 22.11.1951 under the chairmanship of Shri K.C. Neogy. So far 16th Finance Commissions have been appointed which as follows:
Finance CommissionYear of EstablishmentChairmanOperational Duration
First1951K.C. Neogy1952-57
Second1956K. Santhanam1957-62
Third1960A.K. Chanda1962-66
Fourth1964P.V. Rajamannar1966-69
Fifth1968Mahaveer Tyagi1969-74
Sixth1972K. Brahmananda Reddy1974-79
Seventh1977J.M. Shelat1979-84
Eighth1983Y.B. Chavan1984-89
Ninth1987N.K.P. Salve1989-95
Tenth1992K.C. Pant1995-2000
Eleventh1998A.M. Khusro2000-05
Twelfth2002C. Rangarajan2005-10
Thirteenth2007Vijay L. Kelkar2010-15
Fourteenth2013Y.V. Reddy2015-20
Fifteenth2017N.K. Singh2020-26
Sixteenth2023Arvind Panagariya2026-31

45. Who was the Chairman of the Twelfth Finance Commission? [M.P. P.C.S. (Pre) 2023, Uttarakhand U.D.A./L.D.A. (Mains) 2006, M.P.P.C.S. (Pre) 2006, U.P.P.S.C. (GIC) 2010]

Correct Answer: (b) Dr. C. Rangarajan
Solution:Chairman of the 10th Finance Commission was K.C. Pant. The First Finance Commission was constituted vide presidential order dated 22.11.1951 under the chairmanship of Shri K.C. Neogy. So far 16th Finance Commissions have been appointed which as follows:
Finance CommissionYear of EstablishmentChairmanOperational Duration
First1951K.C. Neogy1952-57
Second1956K. Santhanam1957-62
Third1960A.K. Chanda1962-66
Fourth1964P.V. Rajamannar1966-69
Fifth1968Mahaveer Tyagi1969-74
Sixth1972K. Brahmananda Reddy1974-79
Seventh1977J.M. Shelat1979-84
Eighth1983Y.B. Chavan1984-89
Ninth1987N.K.P. Salve1989-95
Tenth1992K.C. Pant1995-2000
Eleventh1998A.M. Khusro2000-05
Twelfth2002C. Rangarajan2005-10
Thirteenth2007Vijay L. Kelkar2010-15
Fourteenth2013Y.V. Reddy2015-20
Fifteenth2017N.K. Singh2020-26
Sixteenth2023Arvind Panagariya2026-31

46. The extent of money transfer to the States out of sharable pool of tax collection according to the 12th Finance Commission has been fixed at: [U.P.P.C.S. (Pre) 2006, U.P.P.C.S. (Mains) 2007]

Correct Answer: (c) 30.5 percent
Solution:The twelfth finance commission was appointed by the President (Dr. A.P.J. Abdul Kalam) of India on 1st November, 2002 under the chairmanship of Dr. C. Rangarajan. The 12th Finance Commission had recommended that 30.5 percent of net proceeds of Union taxes should be shared with the States as against the 29.5% of the 11th FC.

47. As per the recommendations of the Twelfth Finance Com- mission, the revenue deficit of the Centre and States by the year 2009-10 should be: [U.P.P.C.S. (Mains) 2008]

Correct Answer: (a) zero%
Solution:The Twelfth Finance Commission had recommended that the revenue deficit of the Centre and States by the year 2009-10 should be zero percent. But this target was not achieved. The revenue deficit was at (-) 0.2 percent of GDP in 2008-09, but in 2009-10 (RE) it stood at 0.7 percent of GDP. As per the Interim Union Budget 2024-25, revenue deficit is estimated at 2.8 and 2.0 percent of GDP in 2023-24 (R.E.) and 2024-25 (B.E.) respectively.

48. 11th Finance Commission has recommended that in the tax revenue collected by the Union, the shareable part of States will be: [U.P. Lower Sub. (Spl.) (Pre) 2002,03]

Correct Answer: (d) 29.5%
Solution:The 11th Finance Commission recommended that the share of the States be fixed at 29.5 percent of the net proceeds of all shareable Central taxes and duties and if any State levied and collected sales tax on the commodities (sugar, tobacco and man made textiles) covered under the Additional Excise Duties (Goods of Special Importance) Act 1957, it would be entitled for 1.5 percent less than that tax devolution (i.e. 28 percent).

49. According to the Tenth Finance Commission the share of resources to be transferred to States from the divisible pool will be: [U.P.P.C.S. (Pre) 1995, 1997]

Correct Answer: (b) 42%
Solution:The Tenth Finance Commission recommended an alternative scheme of sharing of taxes between the Centre and the States from a single divisible pool (gross receipts of all shareable central taxes and duties), under which the share of resources to be transferred to States was fixed at a uniform rate of 29 percent. Fifteenth Finance Commission has recommended that 41 percent of the net proceeds of Union taxes be shared with the States as against the 42% of the Fourteenth FC. The commission felt that, financial resource equivalent to 1% of the net proceeds of Union taxes should be retained with the Central Government for financing the requirements of the newly formed Union Territories of Jammu & Kashmir and Ladakh. The government has accepted the 15th FC recommendations.

50. Match List 1 with List II and select the correct answer. [I.A.S. (Pre) 1997]

List I (Committees)List II (Chaired by)
A. Disinvestment of shares in Public Sector Enterprises1. Raja Chelliah
B. Industrial Sickness2. Onkar Goswami
C. Tax Reforms3. R.N. Malhotra
D. Reforms in Insurance Sector4. C. Rangarajan

Codes :

OptionsABCD
(a)1423
(b)4213
(c)4123
(d)1342
Correct Answer: (b)
Solution:The first committee on the Disinvestment of shares in Public Sector Enterprises was formed under the chairmanship of Dr. C. Rangarajan in the year 1992. In the year 1993, a committee was formed under the chairmanship of Onkar Goswami for the review of industrial sickness. Under the chairmanship of Rajah Chelliah a committee was formed in 1991 to give the recommendation on taxes reforms. For the reforms in insurance sector a committee was formed in 1993 under the chairmanship of R.N. Malhotra.
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