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Q49. 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?

A. Only two
B. Only three✓ Correct
C. Only four
D. All five

Detailed Solution

✓ Correct Answer: Option B

The Fifteenth Finance Commission (XVFC) used a set of criteria for horizontal tax devolution, which is the distribution of the divisible pool of central taxes among the states. The question asks for criteria *other than* population, area, and income distance.

The XVFC's criteria and their respective weights were: - Population (2011 Census): 15.0% - Area: 15.0% - Forest & Ecology: 10.0% (Statement 2) - Income Distance: 45.0% - Tax & Fiscal Efforts: 2.5% (Statement 5) - Demographic Performance: 12.5% (Statement 1) Based on this, 'Demographic performance', 'Forest and ecology', and 'Tax and fiscal efforts' are the three criteria used by the XVFC in addition to population, area, and income distance. 'Governance reforms' and 'Stable government' were not explicit criteria for horizontal devolution.

This question tests specific knowledge of fiscal federalism and the recommendations of the Finance Commission, a crucial constitutional body.

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The recommendations and criteria of the Fifteenth Finance Commission for tax devolution have been a frequent topic in news and policy discussions.

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