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      Question

      In the 16th Finance Commission’s criteria for tax

      devolution, which criterion has the highest weight and what is that weight?
      A Population (2011) – 17.5% Correct Answer Incorrect Answer
      B Income Distance – 42.5% Correct Answer Incorrect Answer
      C Forest Cover – 10% Correct Answer Incorrect Answer
      D Area – 10% Correct Answer Incorrect Answer
      E Contribution to GDP – 10% Correct Answer Incorrect Answer

      Solution

      Income Distance carries the largest weight of 42.5% in the 16th Finance Commission’s tax devolution formula. This criterion is designed to promote equity by directing a higher share of tax devolution to lower-income states. Income Distance is defined as the difference between a state’s per capita GSDP and the average per capita GSDP of the top three states.

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