Consider the following:
1. Demographic performance
2. Forest and ecology
3. Governance reforms
4. Stable government
5. Tax and fiscal efforts
For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance?

Question

Question

This question was previously asked in

UPSC Civil Services Prelims 2023: General Studies (SET - A - Held on 28 May)

Answer 1

The Correct answer is Option 2.

Key PointsFifteenth Finance Commission & horizontal tax devolution:

The Fifteenth Finance Commission used three additional criteria apart from population, area, and income distance for horizontal tax devolution:
Demographic Performance:
- This considers states' efforts in improving population control, fertility rates, infant mortality rates, and gender equality indicators.
- Thus, used as a criterion.
Forest and Ecology:
- This criterion evaluates the efforts made by states in preserving and protecting forest cover and natural resources, emphasizing environmental sustainability.
- Thus, used as a criterion.
Tax and Fiscal Efforts:
- The commission considered the tax effort of states, which measures the ability of states to mobilize resources through efficient tax collection and expanding the tax base.
- Thus, used as a criterion.
Governance Reforms and Stable Government:
- They were not used as criteria by the Fifteenth Finance Commission for horizontal tax devolution.
Three of the listed factors (Demographic Performance, Forest and Ecology, and Tax and Fiscal Efforts) were used as criteria for horizontal tax devolution, aside from population, area, and income distance.
Hence, Option 2 is correct.