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Doctors Medicines MCQs Q&A

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2
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1 Answers

Option 1 : 1 only

The correct answer is 1 only.

 

  • The Finance Commission is a quasi judicial body provided under Article 280 of the Constitution and is constituted by the president of India every fifth year or at such earlier time as he considers necessary.
  • It consists of a chairman and four other members to be appointed by the President who hold office for such period as specified by the president in his order and are eligible for reappointment.
  • The Constitution authorises the Parliament to determine the qualifications of members of the commission and the manner in which they should be selected which the Parliament has accordingly specified in the Finance Commission Act, 1951.
  • The Finance Commission is required to make recommendations to the President of India on the following matters:
    • The distribution of the net proceeds of taxes to be shared between the Centre and the states, and the allocation between the states of the respective shares of such proceeds.
    • The principles that should govern the grants-in-aid to the states by the Centre (i.e. out of the consolidated fund of India).
    • The measures needed to augment the consolidated fund of a state to supplement the resources of the panchayats and the municipalities in the state on the basis of the recommendations made by the state finance commission.
    • Any other matter referred to it by the president in the interests of sound finance. 

  • Recommendations of the 14th Commission include:
    • Devolution of taxes to states: Tax devolution should be the primary source of transfer of funds to states. The share of taxes of the centre to states is recommended to be increased from 32% to 42%.
    • Additional budgetary needs of the states will be filled by grants-in-aid to the states. The total revenue deficit grant to states in the 2015-20 period is recommended to be Rs 1,94,821 crore.
    • Weights of indicators for share in taxes: The weights of various indicators in the calculation of states’ share of taxes have been fixed at the following: (i) 1971 population: 17.5%, 2011 population: 10%, (ii) area: 2% for smaller states, 15% for general weight, (iii) forest cover: 7.5%, and (iv) income distance (distance of state’s income from the state having the highest income): 50%.
    • Fiscal deficit: Fiscal deficit of states should be aimed at 3% of the Gross State Domestic Product (GSDP) during the period 2015 to 2020. States will be eligible for a flexibility of 0.25% over this limit. They will be eligible for this flexibility if their debt-GSDP ratio is less than or equal to 25% in the previous year.
    • States will also have an option for an additional borrowing of 0.25% of their GSDP, if their interest payments are less than or equal to 10% of their revenue receipts in the previous year.
    • Compensation to states for GST: An autonomous and independent Goods and Services Tax (GST) Compensation Fund is to be set up in order to facilitate compensation to states. Revenue compensation to states for the GST should be for five years. 100% compensation should be paid to states in the first three years, 75% compensation for the fourth year, and 50% compensation should be paid in the fifth year.
    • Grants to local governments: The total grant to local governments for 2015-20 has been fixed at Rs 2,87,436 crore, of which Rs 2,00,292 crore is recommended to panchayats and Rs 87,144 crore to municipalities.
      • Grants to local governments should be in two parts-a basic grant and a performance grant. For gram panchayats, 90% of the share will be basic grants, and 10% will be performance grants. For municipalities, basic grants and performance grants will constitute 80% and 20% of the total grants, respectively.
    • Performance grants are proposed to be introduced with a view to:
      • encourage the maintenance of the states’ receipts and expenditure accounts, and
      • bring about an increase in the state’s own revenues.
    • Amendments to FRBM (Fiscal Responsibility and Budget Management) Act: The FRBM Act, 2003 should be amended, to remove the definition of effective revenue (difference between revenue deficit and grants for creation of capital assets).
  • An independent fiscal council should be created to evaluate the fiscal policy implications of budget proposals, before the budget is announced. States are advised to amend their FRBM Acts in a similar manner.
  • Alternatively, the FRBM Act may be replaced with a Debt Ceiling and Fiscal Responsibility Legislation, in order to bring greater legitimacy to fiscal management.
  • There was no recommendation concerning sector-specific grants. Hence, Statement 2 is NOT correct.
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Related Questions

Two statements are followed by three Conclusions I, II and III. You have to consider the statements to be true, even if they seem to be at variance from commonly known facts. You are to decide which of the given conclusions can definitely be drawn from the given statements and indicate your answer accordingly. Statements: I. After a Pay Commission bonanza of 2% hike in dearness allowance in March, central government employees and pensioners can expect another round of salary increase with the government set to modify the index and base year for calculating dearness allowance.  II. The labour ministry is working on a new series of consumer price index for industrial workers (CPI-IW), which is used to determine dearness allowance (DA).  Conclusions: I. DA is a cost of living adjustment allowance paid to government employees, public sector employees and pensioners in the country. It is calculated as a percentage of an employee’s basic salary to mitigate the impact of inflation on people.  II. Since theindex is used to determine dearness allowance of all government employees and industrial workers there may be significant financial implication. III. The trend so far is that the weightage of transport, healthcare and housing has gone up many fold in the new series in the monthly expenditure of an industrial worker, especially consumption of petrol and diesel with the addition of cars to it, while there is decline in overall food basket which is being diversified.?
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