RAS question
The 15th Finance Commission (2021-26) recommended that the States' share in the divisible pool of Central taxes should be:
Correct answer: (D) 41%.
The 15th Finance Commission recommended that States receive 41% of the divisible pool of Central taxes for the 2021-26 award period.
Explanation
The 15th Finance Commission, chaired by N.K. Singh, fixed the States' vertical share at 41% of the divisible pool of Central taxes for 2021-22 to 2025-26. The report explains this as a continuity choice: it maintained stability and predictability in Union-to-State transfers and kept the share broadly in line with the 14th Finance Commission's approach. The visible fall from 42% to 41% was not a policy reversal against States; it was the required adjustment after the erstwhile State of Jammu and Kashmir was reorganised into the Union Territories of Jammu and Kashmir and Ladakh. For exam purposes, the key point is that 41% is the operative 15th Finance Commission recommendation for States during 2021-26.
Why the other options are wrong
- (A) 32% was the earlier level mentioned in the report in relation to the 13th Finance Commission, not the 15th Finance Commission's 2021-26 recommendation.
- (B) 42% refers to the 14th Finance Commission's recommendation before the Jammu and Kashmir reorganisation adjustment, so it is not the 15th Finance Commission's final 2021-26 figure.
- (C) 50% is not supported by the 15th Finance Commission Report for 2021-26, Volume I; the report states a 41% vertical share for States.
Concept
This tests fiscal federalism, especially Finance Commission tax devolution and the distinction between vertical and horizontal sharing. RAS repeatedly asks such figures because they link constitutional bodies, Centre-State finances and current administrative changes.