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What is the primary purpose of the Finance Commission of India?
- a)To prepare the national budget.
- b)To distribute tax proceeds between the central and state governments.
- c)To oversee the functioning of the Reserve Bank of India.
- d)To regulate trade and commerce in the country.
Correct answer is option 'B'. Can you explain this answer?
Verified Answer
What is the primary purpose of the Finance Commission of India?a)To pr...
The primary purpose of the Finance Commission of India, as mentioned in the text, is to distribute tax proceeds between the central and state governments. This function helps define the financial relations between the Centre and the states.
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What is the primary purpose of the Finance Commission of India?a)To pr...
Primary Purpose of the Finance Commission of India
The Finance Commission of India plays a crucial role in the fiscal framework of the country. Its primary function is to ensure a fair distribution of financial resources between the central and state governments.
Key Functions of the Finance Commission:
- Distribution of Tax Proceeds:
The commission recommends how the net proceeds of taxes should be shared between the central and state governments. This ensures that states receive adequate funding for their development and welfare activities.
- Assessment of Financial Position:
It evaluates the financial position of the states and suggests measures to improve their fiscal health, recognizing regional disparities and needs.
- Grants-in-Aid:
The commission also recommends grants-in-aid to states that may need financial assistance to meet certain expenditures, which helps in balancing regional development.
- Periodic Review:
The Finance Commission is constituted every five years, allowing for periodic assessment and adjustments based on changing economic conditions and needs.
Importance of the Finance Commission:
- Equitable Resource Allocation:
It ensures that financial resources are allocated in a manner that promotes economic stability and growth across different regions.
- Strengthening Fiscal Federalism:
By promoting cooperation and coordination between various levels of government, it strengthens the federal structure of India.
In summary, the Finance Commission of India is pivotal in managing the financial relationships between the central and state governments, ensuring an equitable distribution of resources, which is essential for the country’s development.
The Finance Commission of India plays a crucial role in the fiscal framework of the country. Its primary function is to ensure a fair distribution of financial resources between the central and state governments.
Key Functions of the Finance Commission:
- Distribution of Tax Proceeds:
The commission recommends how the net proceeds of taxes should be shared between the central and state governments. This ensures that states receive adequate funding for their development and welfare activities.
- Assessment of Financial Position:
It evaluates the financial position of the states and suggests measures to improve their fiscal health, recognizing regional disparities and needs.
- Grants-in-Aid:
The commission also recommends grants-in-aid to states that may need financial assistance to meet certain expenditures, which helps in balancing regional development.
- Periodic Review:
The Finance Commission is constituted every five years, allowing for periodic assessment and adjustments based on changing economic conditions and needs.
Importance of the Finance Commission:
- Equitable Resource Allocation:
It ensures that financial resources are allocated in a manner that promotes economic stability and growth across different regions.
- Strengthening Fiscal Federalism:
By promoting cooperation and coordination between various levels of government, it strengthens the federal structure of India.
In summary, the Finance Commission of India is pivotal in managing the financial relationships between the central and state governments, ensuring an equitable distribution of resources, which is essential for the country’s development.
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What is the primary purpose of the Finance Commission of India?a)To prepare the national budget.b)To distribute tax proceeds between the central and state governments.c)To oversee the functioning of the Reserve Bank of India.d)To regulate trade and commerce in the country.Correct answer is option 'B'. Can you explain this answer?
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What is the primary purpose of the Finance Commission of India?a)To prepare the national budget.b)To distribute tax proceeds between the central and state governments.c)To oversee the functioning of the Reserve Bank of India.d)To regulate trade and commerce in the country.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 What is the primary purpose of the Finance Commission of India?a)To prepare the national budget.b)To distribute tax proceeds between the central and state governments.c)To oversee the functioning of the Reserve Bank of India.d)To regulate trade and commerce in the country.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 What is the primary purpose of the Finance Commission of India?a)To prepare the national budget.b)To distribute tax proceeds between the central and state governments.c)To oversee the functioning of the Reserve Bank of India.d)To regulate trade and commerce in the country.Correct answer is option 'B'. Can you explain this answer?.
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