Fiscal Federalism & Finance Commission MCQ — 45 Practice Questions with Answers

Practice 45 Fiscal Federalism & Finance Commission multiple-choice questions with detailed answers and explanations. Ideal for RAS/RPSC exam preparation.

45 Questions Indian Economy

Q1. With reference to Indian public finance, consider the following pairs: (Scheme / Fund) - (Correct description) 1. UDAY Scheme - Restructuring of distribution companies (DISCOM) debt by states 2. National Calamity Contingency Fund - Replaced by NDRF under Disaster Management Act 2005 3. Revenue Deficit Grant - Recommended by Finance Commission to fill the gap between assessed revenue and expenditure of states 4. GST Compensation Cess - Collected for 5 years (2017-2022) to compensate states for GST revenue shortfall Which of the above pairs are CORRECTLY matched?

A 1 and 3 only

B 2, 3 and 4 only

C 1, 2, 3 and 4 Correct

D 1, 2 and 4 only

Explanation

All four pairs are correctly matched. (1) UDAY (Ujwal DISCOM Assurance Yojana, 2015) allowed state govts to take over 75% of DISCOM debt. (2) National Calamity Contingency Fund was replaced by NDRF under Disaster Management Act 2005. (3) Revenue Deficit Grants are provided to revenue-deficit states based on Finance Commission assessment. (4) GST Compensation Cess was levied for 5 years (June 2017 to June 2022) to compensate states guaranteed 14% annual revenue growth.

Q2. The total expenditure estimated in the Union Budget 2025-26 is approximately:

A ₹47.66 lakh crore

B ₹44 lakh crore

C ₹50.65 lakh crore Correct

D ₹55 lakh crore

Explanation

The Union Budget 2025-26 estimated total expenditure at approximately ₹50.65 lakh crore, with capital expenditure at ₹11.21 lakh crore. Revenue receipts were estimated at about ₹34.96 lakh crore and total receipts (excluding borrowings) at about ₹34.96 lakh crore.

Q3. What was the gross GST revenue collected for December 2025 as reported on January 1, 2026?

A ₹1.75 lakh crore Correct

B ₹1.95 lakh crore

C ₹1.65 lakh crore

D ₹1.85 lakh crore

Explanation

December 2025 gross GST revenue was ₹1,74,550 crore (approx ₹1.75 lakh crore), a 6.1% YoY growth.

Q4. The 14th Finance Commission (2015-20) recommended States' share in divisible pool as:

A 32%

B 50%

C 42% Correct

D 36%

Explanation

The 14th Finance Commission (chaired by Y.V. Reddy) recommended 42% as States' share — a significant increase from the 32% recommended by the 13th FC. The 15th FC reduced it to 41%.

Q5. The Goods and Services Tax Appellate Tribunal (GSTAT) was constituted in:

A 2023 Correct

B 2025

C 2019

D 2017

Explanation

GSTAT was constituted in 2023 after the Madras High Court struck down provisions on the Tribunal's composition. The principal bench is in New Delhi, with state benches across India.

You've seen 5 of 45 questions

Q6. Which of the following is NOT part of the divisible pool of central taxes that is shared with states?

A Corporation Tax

B Income Tax

C Surcharges and Cesses levied by Centre

D Central GST (CGST)

Q7. Which commission recommends the share of central taxes to be devolved to states including Rajasthan?

A NITI Aayog

B Finance Commission

C Planning Commission

D State Finance Commission

Q8. Consider the following statements about horizontal devolution criteria used by the Finance Commissions: 1. Population is used as a criterion by all Finance Commissions since the 1st FC. 2. The 15th Finance Commission used 2011 Census data for population, departing from 1971 data used earlier. 3. Demographic performance criterion rewards states that have reduced their fertility rate. 4. Forest and ecology cover was first introduced as a criterion by the 13th Finance Commission. Which of the above statements are CORRECT?

A 1, 2 and 3 only

B 2, 3 and 4 only

C 1, 2, 3 and 4

D 1 and 3 only

Q9. The Finance Commission recommends on all of the following EXCEPT:

A Principles governing grants-in-aid from the Consolidated Fund of India to States

B Measures to augment the Consolidated Fund of a State to supplement Panchayat and Municipality resources

C Distribution of net proceeds of taxes between Union and States

D Monetary policy and interest rate fixation

Q10. Which state topped the NITI Aayog Fiscal Health Index 2026 for the second consecutive year?

A Karnataka

B Gujarat

C Maharashtra

D Odisha

Q11. GST Council is a:

A Executive body

B Statutory body

C Constitutional body

D Advisory body

Q12. Deadweight loss in taxation refers to:

A Economic inefficiency caused by taxes that reduce total surplus

B Tax evasion

C Tax revenue collected by government

D Cost of tax administration

Q13. In India, the largest source of tax revenue for the Central Government is:

A Customs Duty

B Excise Duty

C GST

D Income Tax

Q14. The Consolidated Fund of India is provided under which Article?

A Article 270

B Article 267

C Article 266

D Article 265

Q15. The GST Council decides tax rates by what type of majority?

A Unanimous decision

B Simple majority

C Three-fourths majority of weighted votes

D Two-thirds majority

40 more questions available with a free account

Frequently Asked Questions

How many Fiscal Federalism & Finance Commission MCQ questions are available?

There are 45 Fiscal Federalism & Finance Commission practice MCQs available on Aspirant Academy, with detailed answers and explanations for each question.

Are answers and explanations provided for Fiscal Federalism & Finance Commission MCQs?

Yes, every Fiscal Federalism & Finance Commission question comes with the correct answer and a detailed explanation to help you understand the underlying concept.

How is Fiscal Federalism & Finance Commission relevant to the RAS/RPSC exam?

Fiscal Federalism & Finance Commission falls under the Indian Economy section of the RAS/RPSC syllabus. It is a frequently tested area and regular practice with these MCQs will strengthen your preparation.

Can I practice Fiscal Federalism & Finance Commission questions in Hindi?

Yes, Aspirant Academy offers bilingual support. You can practice Fiscal Federalism & Finance Commission MCQs in both English and Hindi, including questions, options, and explanations.

Explore Other Subjects

child-development-pedagogy Rajasthan History, Art & Culture Indian Constitution & Governance Current Affairs Science & Technology Indian History (Ancient & Medieval) social-studies Environment & Ecology

Ready to practice all 45 questions?

Create a free account to access all Fiscal Federalism & Finance Commission MCQs, get detailed explanations, and track your progress across every subject.

Browse all subjects

Fiscal Federalism & Finance Commission MCQ — 45 Practice Questions with Answers

Practice Questions

You've seen 5 of 45 questions

More Questions (Sign up required)

Frequently Asked Questions

More Topics in Indian Economy

Monetary & Fiscal Policy

Economic Growth & Sustainable Development

Industrial Growth & Economic Reforms

Service Sector, Energy & Transport

Agricultural Development

Skill Development & Social Justice

Measurement of Development & HDI

Agricultural Marketing

NITI Aayog Trade Watch Quarterly

Payment Systems

Production Linked Incentive

External Sector

Insurance & Maritime Trade

Infrastructure

Credit Guarantee

Mining Sector Reform

Energy Security

Atal Pension Yojana

Mining

Agricultural Pricing

International Organizations

Financial Markets

Inflation and Growth

Statistical System of India

Startup Ecosystem

Civil Aviation Ministry

Fertiliser Security

Transport Infrastructure

Aviation Sector

Trade Agreements

Agriculture Markets

SEBI and Capital Markets

Energy

Gender Statistics

RoDTEP Scheme

Customs Tariff

National Accounts

Centralised Payment System

GDP Estimates

GST Administration

Agricultural Procurement

Textile Exports

Social Security Schemes

Direct Taxes

Power and Energy Demand

Electronic Toll Collection

Digital Governance

Digital Payments

Free Trade Agreements

Startup India Funding

GDP and Growth Forecasts

Macroeconomic Indicators

Public Finance

Industrial Policy

Labour Force Participation

Merchandise Trade Composition

Energy Demand

Venture Capital

Inflation Statistics

Rural Employment

Power Sector

Free Trade Agreement

Food Security

Foreign Trade and Balance of Payments

Energy Infrastructure

Highway Tolling

RoDTEP Export Scheme

Explore Other Subjects

Ready to practice all 45 questions?