economics medium MCQ

The Finance Commission of India, constituted under Article 280, is primarily responsible for:

  1. Auditing the accounts of the Union and State governments
  2. Recommending the distribution of net tax proceeds between the Centre and States, and the principles governing grants-in-aid
  3. Formulating the annual Union Budget and presenting it to Parliament
  4. Regulating the issuance of government bonds and treasury bills

Answer: Recommending the distribution of net tax proceeds between the Centre and States, and the principles governing grants-in-aid

The Finance Commission is a quasi-judicial constitutional body appointed by the President every five years. Its core mandate is to address the vertical fiscal imbalance (between Centre and States) and horizontal fiscal imbalance (among States themselves) by recommending the tax devolution formula and providing grants to states in need of assistance, thereby sustaining India's cooperative federalism.

Topic Public Finance - Institutions
Exam Relevance UPSC Prelims, SSC CGL, Railway
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