Which of the following statements with regard to recommendations of the 15th Finance Commission of India are correct?
- I.It has recommended grants of ₹ 4,800 crores from the year 2022–23 to the year 2025–26 for incentivizing States to enhance educational outcomes.
- II.45% of the net proceeds of Union taxes are to be shared with States.
- III.₹ 45,000 crores are to be kept as performance-based incentive for all States for carrying out agricultural reforms.
- IV.It reintroduced tax effort criteria to reward fiscal performance.
Select the correct answer using the code given below.
Answer & explanation
Answer: (c) I, III and IV
Statements I, III and IV match the Fifteenth Finance Commission's report. Statement II is wrong: the Commission kept the States' share at 41 per cent of the divisible pool, not 45 per cent.
- ✓ I It recommended ₹4,800 crore (₹1,200 crore a year) from 2022-23 to 2025-26 to incentivise States to improve educational outcomes.
- ✗ II Vertical devolution was kept at 41 per cent of the divisible pool: the Fourteenth Commission's 42 per cent, adjusted by about 1 per cent for the change in the status of Jammu and Kashmir.
- ✓ III ₹45,000 crore was set aside as a performance-based incentive for States carrying out agricultural reforms, such as amending land-related laws on the lines of NITI Aayog's model law.
- ✓ IV The Commission re-introduced the tax effort criterion to reward fiscal performance.
Remember · 15th Finance Commission (2021–26): States' share 41% of divisible pool; ₹4,800 crore education incentive; ₹45,000 crore agri-reform incentive; tax-effort criterion re-introduced.
Sources
- PIB, Finance Commission (1 Feb 2021): The Report of the Fifteenth Finance Commission ↗ “XVFC has recommended grants of Rs. 4,800 crore (Rs. 1,200 crore each year) from 2022-23 to 2025-26 for incentivising the States to enhance educational outcomes. … XVFC has recommended maintaining the vertical devolution at 41 per cent – the same as in our report for 2020-21. … XVFC has recommended that Rs. 45,000 crore be kept as performance-based incentive for all the States for carrying out agricultural reforms for amending their land-related laws on the lines of NITI Aayog’s model law … XVFC has re-introduced tax effort criterion to reward fiscal performance.”
Question and answer: UPSC's official GS Paper I (2025, Series A) — paper ↗ · answer key ↗. Explanation: Minimalist IAS, checked 30 Sept 2026 (how we verify). ·