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Finance Commission / Fiscal Federalism

1 UPSC Prelims MCQs tagged "Finance Commission / Fiscal Federalism". Free practice with answer keys, explanations, and timed mock tests on Anantam IAS.

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  1. With reference to the 16th Finance Commission (FC) and its recommendations, consider the following…

    With reference to the 16th Finance Commission (FC) and its recommendations, consider the following statements regarding which are incorrect:

    1. AOnly 1 and 2
    2. BOnly 2 and 3
    3. COnly 1 and 3
    4. D1, 2 and 3
    Answer and explanation

    Correct answer: C

    The Finance Commission is a quasi-judicial body, but its recommendations are advisory and not legally binding on the Union, so statement 1 is incorrect. The 16th FC did discontinue revenue deficit, sector-specific and state-specific grants rather than continuing them, so statement 3 is incorrect. Statement 2 about adding 'contribution to GDP' for horizontal devolution is true, so the incorrect statements are 1 and 3.

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    Indian Polity UPSC GPSC-2026 Hard