Consider the following:1. Demographic performance2. Forest and ecology3. Governance reforms4. Stable government5. Tax and fiscal efforts For horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance ?
✓ Correct answer: b) Only three
ExplanationThe Fifteenth Finance Commission (XVFC)’s Term of Reference was unique and wide-ranging in many ways.The Commission was asked to recommend performance incentives for States in many areas like the power sector, adoption of DBT, solid waste management, etc. The XV FC’s Report is organised in four volumes and deals with two kinds of devolution : Polity 219Vertical Devolution: distribution of net proceeds of taxes between the Union and states.Horizontal Devolution: distribution of net proceeds of taxes among the states.Options 1, 2 and 5 are correct: Horizontal Devolution based on principles of need, equity and performance, the overall devolution formula is as follows : Criteria Weight (%) Population 15 Area 15 Forest and Ecology 10 Income Distance 45 Tax and Fiscal Efforts 2.5 Demographic Performance 12.5Demographic performance: States with better performance in controlling population growth were rewarded (12.5% weightage).Forest and ecology: States with a larger share of dense forest area received weightage (10%).Tax and fiscal efforts: States with higher tax collectio
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