RAS question
Which commission recommends the share of central taxes to be devolved to states including Rajasthan?
Correct answer: (B) Finance Commission.
The Finance Commission recommends the share of central taxes to be devolved to States, including Rajasthan.
Explanation
The Finance Commission is the right answer because Article 280 provides for a Finance Commission to recommend how the net proceeds of taxes are distributed between the Union and the States, and how the States' respective shares are allocated. The Press Information Bureau release on the Sixteenth Finance Commission states that its terms of reference include recommendations on the distribution of divisible central taxes and the allocation of State shares. This is exactly the function asked in the question: tax devolution from the Centre to States such as Rajasthan. The Finance Commission is constituted under Article 280, and the Fifteenth Finance Commission recommended 41% devolution to States.
Why the other options are wrong
- (A) NITI Aayog is a policy think tank, whereas the question asks about the constitutional recommendation of central tax devolution to States.
- (C) The Planning Commission was replaced by NITI Aayog and was not the constitutional body that recommends the Union-State distribution of central tax proceeds.
- (D) A State Finance Commission deals with transfers from a State to local bodies, not the Centre-to-State sharing of central taxes.
Concept
This tests fiscal federalism under Indian Economy, especially the Finance Commission's role in Union-State tax sharing. It recurs in RAS because Rajasthan's revenue position depends heavily on central tax devolution and grants.