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?
Answer & explanation
Answer: (b) Only three
The Fifteenth Finance Commission shared the divisible pool among states on six criteria: income distance (45%), population (15%), area (15%), forest and ecology (10%), demographic performance (12.5%) and tax and fiscal efforts (2.5%). Governance reforms and stable government were not criteria, so three of the listed items were used.
- ✓ 1. Demographic performance carried a 12.5% weight: the Commission used Census 2011 population but wanted to reward states that had done better on the demographic front.
- ✓ 2. Forest and ecology carried a 10% weight in the 15th Finance Commission's formula.
- ✗ 3. Governance reforms were not a criterion in the devolution formula.
- ✗ 4. 'Stable government' was never part of the formula.
- ✓ 5. Tax and fiscal efforts carried a 2.5% weight: the Commission re-introduced the tax effort criterion to reward fiscal performance.
Remember · 15th FC horizontal devolution: income distance 45, population (2011) 15, area 15, demographic performance 12.5, forest and ecology 10, tax and fiscal efforts 2.5. States' share: 41%.
Sources
- PIB (Ministry of Finance), The Report of the Fifteenth Finance Commission, 1 February 2021: horizontal devolution ↗ “Criteria Weight (%) Population 15.0 Area 15.0 Forest & ecology 10.0 Income distance 45.0 Tax & fiscal efforts 2.5 Demographic performance 12.5 Total 100 … XVFC has assigned a 12.5 per cent weight to the demographic performance criterion. … States’ share at 41 per cent of divisible pool comes to 42.2 lakh crore for 2021-26 period.”
Question and answer: UPSC's official GS Paper I (2023, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·