RAS question
The 15th Finance Commission recommended what percentage of divisible pool to states?
Correct answer: (A) 41%.
The Fifteenth Finance Commission recommended that states receive 41% of the divisible pool as vertical devolution.
Explanation
The Fifteenth Finance Commission fixed states' vertical devolution at 41% of the divisible pool. The PIB release explains the logic: this kept the level broadly aligned with the Fourteenth Finance Commission's 42% recommendation, but made a required adjustment of about one percentage point because the erstwhile State of Jammu and Kashmir had become the Union Territories of Ladakh and Jammu and Kashmir. Horizontal distribution among states uses population, area, forest and ecology, income distance, demographic performance, and tax and fiscal efforts. The 41% figure is not a general grant figure or a horizontal-devolution weight; it is the vertical share of the divisible pool assigned to states.
Why the other options are wrong
- (B) 45% is too high for vertical devolution; it belongs to the income-distance criterion for horizontal distribution, not the states' share of the divisible pool.
- (C) 42% refers to the Fourteenth Finance Commission's level before the one-point adjustment made after the change in Jammu and Kashmir's status.
- (D) 38% understates the recommendation, because the Fifteenth Finance Commission maintained states' vertical devolution at 41%.
Concept
This tests Finance Commission recommendations under fiscal federalism, especially the difference between vertical devolution and horizontal distribution. It recurs in RAS because devolution percentages, criteria, and Centre-state fiscal relations are standard Indian Economy themes.