14th Finance Commission, Fiscal Management - GS questions based on daily current affairs

1)   Which of the following statement / s is / are correct?

1) Sector specific grants are continued from the Thirteenth Finance Commission to the Fourteenth Finance Commission (FFC).

2) The FFC has recommended reductions in Grant-in Aids and Central Assistance to States (CAS).

3) The FFC has recommended grants to rural and urban local bodies, performance grant, grants for revenue deficit.

a. Only 1 and 2
b. Only 1 and 3
c. Only 2 and 3
d. None of the above
Answer  Explanation 

ANSWER: Only 2 and 3

Explanation:
The FFC has not made any recommendation concerning sector specific-grants unlike the Thirteenth Finance Commission. CAS has become more and more discretionary in recent years. Grants in statement 3 are formula based and hence progressive.
2)   Relative to the Thirteenth Finance Commission, the Fourteenth Finance Commission (FFC) has incorporated which of the following new variables for tax devolution?

1) 2011 Population
2) Fiscal Discipline of States
3) Forest Cover
4) Human Development Index (HDI) of the state

a. Only 1 and 3
b. Only 1, 2 and 3
c. Only 1, 2 and 4
d. Only 2 and 4
Answer  Explanation 

ANSWER: Only 1 and 3

Explanation:
The FFC has incorporated two new variables: 2011 population and forest cover; and excluded the fiscal discipline variable.

3)   Which of the following statement / s is / are correct?

1. The Fourteenth Finance Commission (FFC) has enhanced the share of the states from the current 32 percent to 40 per cent.

2. All special category states are gainers while only few general category states will benefit in absolute terms.

a. Only 2
b. Only 1
c. Both 1 and 2
d. None of the above
Answer  Explanation 

ANSWER: None of the above

Explanation:
The share is 42%. It is a radical enhancement. .The Twelfth (period 2005-10) and Thirteenth (period 2010-15) had recommended a state share of 30.5% (increase of 1%) and 32% (increase of 1.5%). All states stand to gain from FFC transfers in absolute terms. Gains by each state as compared to what they received in earlier years differ. Thus in relative terms few states gain more than others.
4)   Who is the chairman of the Fourteenth Finance Commission?

a. Dr. Vijay Kelkar
b. Dr. Y. V. Reddy
c. C. Rangarajan
d. Raghuram Rajan
Answer  Explanation 

ANSWER: Dr. Y. V. Reddy

Explanation:
The Finance Commission is a Constitutional body formulated under Article 280 of the Indian Constitution. It is constituted every five years by the President of India. Dr. Vijay Kelkar headed the Thirteenth Commission and C. Rangarajan the Twelfth. Raghuram Rajan is current RBI governer.

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