New RBI Grade B 2025 Notification will come Soon! Enroll Here

    Question

    The 15th Finance Commission in India has recommended a

    significant increase in the share of tax revenues allocated to state governments. This is aimed at empowering states to address their specific development needs and priorities. What is the potential impact of this recommendation on the fiscal autonomy of state governments?
    A It will reduce the fiscal autonomy of state governments. Correct Answer Incorrect Answer
    B It will have no impact on the fiscal autonomy of state governments. Correct Answer Incorrect Answer
    C It will enhance the fiscal autonomy of state governments. Correct Answer Incorrect Answer
    D It will lead to a fiscal deficit at the state level. Correct Answer Incorrect Answer
    E It will lead to a fiscal surplus at the state level. Correct Answer Incorrect Answer

    Solution

    By increasing the share of tax revenues allocated to states, the Finance Commission's recommendation empowers state governments with greater financial resources, allowing them to make more independent decisions regarding their spending priorities.

    Practice Next