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Income distance criteria used by 15th Finance Commission refers to:
- a)The difference between the per capita income of the state from that of national per capita income.
- b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.
- c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.
- d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
Income distance criteria used by 15th Finance Commission refers to:a)T...
• The Finance Commission is constituted by the President under article 280 of the Constitution, mainly to give its recommendations on the distribution of tax revenues between the Union and the States and amongst the States themselves.
• The XV Finance Commission headed by N.K. Singh sought to balance the principles of fiscal needs, equity, and performance for determining the criteria for horizontal sharing.
• The criteria used by the commission for devolution of funds include:
1. Population (15%),
2. Area (15%),
3. Forest and Ecology (10%),
4. Income Distance (45%),
5. Demographic performance (12.5%),
6. Tax Effort (2.5%).
• The commission has recommended an aggregate share of 41 percent of the net proceeds of Union taxes (divisible pool) to be devolved to States in the year 2020-21.
• Income distance is calculated as the difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.
• Income Distance criteria is used to make the devolution formula more equalizing and progressive and provides higher devolution to States with lower per capita income (and lower own tax capacity). Here, per capita gross state domestic product (GSDP) is used as a proxy for the distance between States in tax capacity. Poorer states with low per capita income also have higher expenditure needs to provide for comparable services. Hence, the income distance criterion helps in providing for two-sided equalization.
• The XV Finance Commission headed by N.K. Singh sought to balance the principles of fiscal needs, equity, and performance for determining the criteria for horizontal sharing.
• The criteria used by the commission for devolution of funds include:
1. Population (15%),
2. Area (15%),
3. Forest and Ecology (10%),
4. Income Distance (45%),
5. Demographic performance (12.5%),
6. Tax Effort (2.5%).
• The commission has recommended an aggregate share of 41 percent of the net proceeds of Union taxes (divisible pool) to be devolved to States in the year 2020-21.
• Income distance is calculated as the difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.
• Income Distance criteria is used to make the devolution formula more equalizing and progressive and provides higher devolution to States with lower per capita income (and lower own tax capacity). Here, per capita gross state domestic product (GSDP) is used as a proxy for the distance between States in tax capacity. Poorer states with low per capita income also have higher expenditure needs to provide for comparable services. Hence, the income distance criterion helps in providing for two-sided equalization.
Most Upvoted Answer
Income distance criteria used by 15th Finance Commission refers to:a)T...
Income distance criteria used by 15th Finance Commission refers to:
The income distance criteria used by the 15th Finance Commission refers to the difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.
Explanation:
The 15th Finance Commission was constituted by the President of India in November 2017 to recommend the distribution of the net proceeds of taxes between the Union and the States for a period of five years from April 1, 2020. The Commission decided to use the income distance criteria as one of the factors in determining the devolution of funds to the States.
The income distance criteria is a measure of the relative backwardness of a state in terms of economic development. It takes into account the per capita GSDP of the state and compares it with that of the state with the highest per capita GSDP.
The Commission has used the following formula to calculate the income distance criteria:
Income Distance = (1 - State’s GSDP per capita / Highest GSDP per capita) x 100
For example, if the per capita GSDP of a state is Rs. 50,000 and the state with the highest per capita GSDP has a per capita GSDP of Rs. 1,00,000, then the income distance of the state would be:
(1 - 50,000 / 1,00,000) x 100 = 50
The income distance criteria is an important factor in determining the share of funds that a state will receive from the Centre. States with a higher income distance will receive a larger share of funds as compared to states with a lower income distance.
Conclusion:
In conclusion, the income distance criteria used by the 15th Finance Commission refers to the difference between the per capita GSDP of the state from that of the state with the highest per capita GSDP. This criteria is an important factor in determining the devolution of funds to the States.
The income distance criteria used by the 15th Finance Commission refers to the difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.
Explanation:
The 15th Finance Commission was constituted by the President of India in November 2017 to recommend the distribution of the net proceeds of taxes between the Union and the States for a period of five years from April 1, 2020. The Commission decided to use the income distance criteria as one of the factors in determining the devolution of funds to the States.
The income distance criteria is a measure of the relative backwardness of a state in terms of economic development. It takes into account the per capita GSDP of the state and compares it with that of the state with the highest per capita GSDP.
The Commission has used the following formula to calculate the income distance criteria:
Income Distance = (1 - State’s GSDP per capita / Highest GSDP per capita) x 100
For example, if the per capita GSDP of a state is Rs. 50,000 and the state with the highest per capita GSDP has a per capita GSDP of Rs. 1,00,000, then the income distance of the state would be:
(1 - 50,000 / 1,00,000) x 100 = 50
The income distance criteria is an important factor in determining the share of funds that a state will receive from the Centre. States with a higher income distance will receive a larger share of funds as compared to states with a lower income distance.
Conclusion:
In conclusion, the income distance criteria used by the 15th Finance Commission refers to the difference between the per capita GSDP of the state from that of the state with the highest per capita GSDP. This criteria is an important factor in determining the devolution of funds to the States.
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Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer?
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Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer?.
Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? for UPSC 2025 is part of UPSC preparation. The Question and answers have been prepared according to the UPSC exam syllabus. Information about Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? covers all topics & solutions for UPSC 2025 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer?.
Solutions for Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? in English & in Hindi are available as part of our courses for UPSC.
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Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer?, a detailed solution for Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? has been provided alongside types of Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice Income distance criteria used by 15th Finance Commission refers to:a)The difference between the per capita income of the state from that of national per capita income.b)The difference between the per capita gross state domestic product (GSDP) of the state from that of the state with the highest per capita GSDP.c)The difference between the average income of BPL households in the state from that of average income of BPL households across the nation.d)The difference between the per capita income of the state from that of state with lowest fiscal deficit.Correct answer is option 'B'. Can you explain this answer? tests, examples and also practice UPSC tests.
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