MCQ
upsc-p1-economy-public-finance-fc MCQ - Practice Questions with Answers
Solve 9 upsc-p1-economy-public-finance-fc questions for RAS/RPSC preparation.
Practice questions
Q1Consider the following statements about fiscal-transfer channels: 1. Under Article 268, certain duties are levied by the Union but collected and appropriated by the States. 2. Article 275 provides grants-in-aid of State revenues from the Consolidated Fund of India. 3. Grants under Article 282 are identical to Finance Commission grants under Article 275. Which of the statements given above are correct? Select the correct answer using the code given below.
Statements 1 and 2 are correct. Article 268 concerns assigned duties, while Article 275 concerns grants-in-aid of State revenues. Statement 3 is incorrect because Article 282 permits grants for any public purpose and is a distinct route from Article 275 grants and tax devolution.
Q2Arrange the following stages of the fiscal implementation chain in their correct order: 1. Budget provision 2. Union acceptance 3. Release of funds 4. Finance Commission recommendation Select the correct answer using the code given below.
A Finance Commission recommendation comes first, followed by Union acceptance, budget provision and release of funds. These are distinct stages; a recommendation does not instantly become expenditure. The correct sequence is 4-2-1-3.
Q3With reference to the Fifteenth Finance Commission's recommendation for 2021-26, consider the following statements: 1. The recommended vertical devolution was 41% of the divisible pool. 2. Collection costs, cesses and surcharges remain outside the base used for this devolution. 3. The 41% share includes Finance Commission grants as part of the same percentage. Which of the statements given above are correct? Select the correct answer using the code given below.
Statements 1 and 2 are correct. The 41% recommendation applies to the divisible pool, whose base excludes collection costs, cesses and surcharges. Statement 3 is incorrect because grants are a separate component; they are not folded into the 41% tax-devolution share.
Q4Consider the following statements: Statement I: Population in a horizontal-devolution formula captures expenditure need. Statement II: Demographic performance is used to balance the population criterion by recognising better performance in fertility and demographic transition. Which one of the following is correct? Select the correct answer using the code given below.
Both statements are correct, and Statement II explains the balancing role. Population represents current expenditure need, while demographic performance recognises States that performed better in fertility reduction and demographic transition, reducing the risk that such performance is penalised.
Q5Match List I with List II: List I (Horizontal-devolution criterion) 1. Income distance 2. Population 3. Forest and ecology 4. Tax effort List II (Primary signal) A. Revenue mobilisation relative to capacity B. Expenditure need C. Equalisation for lower-income States D. Compensation for national environmental services Select the correct answer using the code given below.
Income distance is the equalisation core for lower-income States; population represents expenditure need; forest and ecology recognise national environmental services; and tax effort rewards revenue mobilisation relative to capacity. The correct matching is 1-C, 2-B, 3-D, 4-A.
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6Consider the following statements: Statement I: State Finance Commissions recommend fiscal sharing between a State and its local bodies. Statement II: The Union Finance Commission replaces State Finance Commissions while augmenting resources for Panchayats and Municipalities. Which one of the following is correct? Select the correct answer using the code given below.
7Match List I with List II: List I (Constitutional provision) 1. Article 270 2. Article 271 3. Article 279A 4. Article 280 List II (Subject) A. Finance Commission B. Surcharge for Union purposes outside the divisible pool C. Sharing of Union tax proceeds D. GST Council Select the correct answer using the code given below.
8With reference to the Finance Commission, consider the following statements: 1. The President constitutes it under Article 280. 2. It consists of a Chairperson and four other members. 3. Its recommendations become law automatically without being laid before Parliament. Which of the statements given above are correct? Select the correct answer using the code given below.
9Arrange the following stages in the correct sequence for a Finance Commission report and its implementation: 1. The report is submitted to the President. 2. The President constitutes the Finance Commission. 3. Devolution flows through budget and accounting processes. 4. The recommendations and the explanatory memorandum are laid before Parliament. Select the correct answer using the code given below.