MCQ
Finance Commission MCQ - Practice Questions with Answers
Solve 73 Finance Commission questions for RAS/RPSC preparation.
Practice questions
Q1Consider the following statements about the Finance Commission and State Finance Commissions: 1. Article 280 links augmentation of State Consolidated Funds for Panchayats to recommendations made by the State Finance Commission. 2. Article 280 contains a parallel clause for Municipalities, also based on State Finance Commission recommendations. 3. Article 280 requires the Union Finance Commission to directly allocate grants to each Panchayat, bypassing the State Consolidated Fund. 4. Article 280 allows any other matter to be referred to the Finance Commission by the President in the interests of sound finance. Which of the statements given above are correct?
Statements 1 and 2 are correct because Article 280 speaks of augmenting the State Consolidated Fund to supplement Panchayat and Municipal resources on the basis of State Finance Commission recommendations. Statement 3 is false because the route specified is through augmentation of the State Consolidated Fund, not direct allocation to each Panchayat. Statement 4 is correct because Article 280 includes matters referred by the President in the interests of sound finance.
Q21. The Finance Commission Act requires the Chairman to be a person who has had experience in public affairs. 2. A member may be selected from persons having special knowledge of economics. 3. A person with a financial or other interest likely to prejudicially affect his functions is still eligible if Parliament is informed. 4. Members hold office for the period specified in the President's order and are eligible for reappointment. Which of the statements given above are correct?
Statement 1 is true: the Act specifies experience in public affairs for the Chairman. Statement 2 is true: special knowledge of economics is one of the statutory qualification channels. Statement 3 is false because such an interest is a disqualification, not a curable condition by informing Parliament. Statement 4 is true: the tenure is as specified by the President's order, with eligibility for reappointment.
Q31. A person of unsound mind is disqualified from being appointed as, or being, a member of the Finance Commission. 2. An undischarged insolvent is disqualified from being a member of the Finance Commission. 3. Conviction for an offence involving moral turpitude is a disqualification for Finance Commission membership. 4. The Finance Commission has all the powers of a civil court for specified procedural matters while performing its functions. Which of the statements given above are correct?
All four statements are correct. The 1951 Act lists the three disqualifications in statements 1-3 and gives the Commission all powers of a civil court for specified procedural matters while performing its functions.
Q4Consider the following statements about the constitutional duties of the Finance Commission: 1. It recommends distribution of divisible net tax proceeds between the Union and the States. 2. It allocates among States the respective shares of such net proceeds. 3. It directly levies surcharges under Article 271 for the purposes of the Union. 4. It recommends principles governing grants-in-aid of State revenues out of the Consolidated Fund of India. Which of the statements given above are correct?
Statements 1, 2 and 4 are correct: Article 280 covers vertical distribution, horizontal allocation among States, and grants-in-aid principles. Statement 3 is false because Article 271 concerns Parliament's power to increase duties or taxes by surcharge; it is not a Finance Commission levy power.
Q5Consider the following statements about local government grants recommended by the Fifteenth Finance Commission: 1. The total grant to local governments for 2021-26 was Rs. 4,36,361 crore. 2. Rs. 2,36,805 crore was earmarked for rural local bodies. 3. Rs. 1,21,055 crore was earmarked for urban local bodies. 4. Health grants through local governments were Rs. 7,051 crore. Which of the statements given above are correct?
Statements 1, 2 and 3 are correct. Statement 4 is false: the health grants through local governments were Rs. 70,051 crore, not Rs. 7,051 crore.
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6Consider the following statements about disqualification and tenure of Finance Commission members: 1. A person of unsound mind is eligible to be appointed as a member of the Commission. 2. An undischarged insolvent is eligible to continue as a member of the Commission. 3. A member is never eligible for reappointment under the Finance Commission Act. Which of the statements given above are correct?
7Consider the following statements about the recommendatory mandate of the Finance Commission under Article 280: 1. It recommends the distribution between the Union and the States of the net proceeds of taxes that are to be divided between them. 2. It recommends the principles governing grants-in-aid of State revenues out of the Consolidated Fund of India. 3. Its constitutional mandate includes recommending measures to augment the Consolidated Fund of a State to supplement Panchayat resources on the basis of State Finance Commission recommendations. 4. It finally decides the tax shares of individual States without requiring any presidential reference or report-laying process. Which of the statements given above are correct?
81. The Finance Commission has the powers of a civil court in summoning and enforcing attendance of witnesses. 2. The Finance Commission may require the production of any document. 3. The Finance Commission may requisition public records from any court or office. 4. The Commission's civil-court powers are territorially confined to the local limits of Delhi. Which of the statements given above are correct?
9Consider the following statements about the Union shareable tax pool: 1. Article 270 covers taxes and duties referred to in the Union List, except duties and taxes referred to in Articles 268 and 269, surcharge under Article 271, and any cess for specific purposes. 2. Every surcharge under Article 271 is compulsorily distributed between the Union and the States. 3. The net proceeds of covered taxes and duties are distributed between the Union and the States in the manner provided in Article 270. Which of the statements given above are correct?
10Consider the following statements about the Finance Commission’s procedure and powers: 1. The President determines the Commission’s procedure in every case. 2. The Commission determines its own procedure. 3. In performing its functions, the Commission has such powers as Parliament may confer by law. Which of the statements given above are correct?
11Consider the following statements about the Finance Commission: 1. Parliament may by law determine the qualifications required for appointment as members of the Commission. 2. Parliament may by law determine the manner in which members of the Commission shall be selected. 3. The Constitution itself fixes only retired Supreme Court judges as eligible members of the Commission. Which of the statements given above are correct?
12Consider the following statements about member tenure under the Finance Commission Act: 1. Every member holds office for the period specified in the President's appointment order. 2. A member may resign by a letter addressed to the Chief Justice of India. 3. The Act permits reappointment of a member. Which of the statements given above are correct?
131. The Finance Commission recommends the distribution between the Union and the States of the net proceeds of taxes to be divided between them. 2. The Finance Commission recommends the principles governing grants-in-aid under Article 282. 3. The Finance Commission recommends measures to augment the Consolidated Fund of India to supplement resources of municipalities. 4. The Finance Commission may consider any other matter referred to it by the President in the interests of sound finance. Which of the statements given above are correct?
14Consider the following statements about Article 280 matters: 1. The Finance Commission may be asked about measures needed to augment the Consolidated Fund of a State to supplement Panchayat resources. 2. The Finance Commission may be asked about measures needed to augment the Consolidated Fund of a State to supplement Municipality resources. 3. The Finance Commission may consider any other matter referred to it by the President in the interests of sound finance. Which of the statements given above are correct?
15Consider the following statements about the Finance Commission Act, 1951: 1. The Act says that 'Commission' means the body constituted under Article 280 of the Constitution. 2. The Chairman must be selected from persons who have had experience in public affairs. 3. All four members must be sitting judges of a High Court. Which of the statements given above are correct?