Recommendations of the 15th Finance Commission for 2020-21
Distilled Policy Brief
- The 15th Finance Commission recommended a total tax devolution of Rs 8,55,176 crore to states for the financial year 2020-21, constituting 41% of the divisible pool of taxes.
- The Commission recommended grants-in-aid including revenue deficit grants worth Rs 74,341 crore for 14 states, special grants worth Rs 6,674 crore, and Rs 90,000 crore for local bodies.
🎯 Prelims High-Yield Examination Points
The 15th Finance Commission recommended 41% tax devolution to states for 2020-21, introducing criteria like demographic performance (12.5%) and tax effort (2.5%), while discontinuing the 1971 population criteria.
⚖️ Mains Analytical & Syllabus Linkages
Analyze the recommendations of the 15th Finance Commission regarding vertical and horizontal tax devolution and their implications on cooperative federalism and fiscal autonomy of states.
🎯 UPSC Prelims Practice Drill
With reference to the recommendations of the 15th Finance Commission for the financial year 2020-21, consider the following statements: 1. The Commission recommended a tax devolution of 41% of the divisible pool of taxes to the states. 2. A new criterion named 'Demographic Performance' was introduced to reward efforts made by states in controlling their population. 3. The weightage given to the 2011 population under the devolution criteria is lower than the weightage given to the 1971 population used by the 14th Finance Commission. Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 2 and 3 only
- [C] 1 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is correct because the 15th Finance Commission recommended a tax devolution of 41% of the divisible pool of taxes to states for 2020-21. Statement 2 is correct as the Demographic Performance criterion was newly introduced to reward states for population control efforts. Statement 3 is incorrect because the 15th Finance Commission used the 2011 population with a 15% weightage, replacing the 1971 population (which carried a 17.5% weightage under the 14th Finance Commission), meaning the 2011 population weightage is actually lower than the 1971 population weightage used previously, but the statement compares it inversely or implies incorrect relational context regarding the specific weights; specifically, the 14th FC used 1971 population (17.5%) and 2011 population (10%), whereas the 15th FC dropped the 1971 population entirely and increased the 2011 population weight to 15%. Thus, statement 3 is factually flawed.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.