FINANCE COMMISSION

Q. 2017 JAN III
While recommending horizontal distribution, which of the following criterion got the least weightage by the 14th Finance Commission?
(1) Demographic change
(2) Area
(3) Population
(4) Income distance
ANS: (A) The finance commission was set up to recommend measures and methods on how revenues need to be distributed between the Centre and states. It was set up under the Article 280 of Indian constitution. The 14th finance commission was headed by Dr. Y V Reddy, with three full-time members and one part-time member. Horizontal imbalances among the states occur because of their difference in the levels of development, income and expenditure. The finance commission helps to resolve this issue by allocating funds so that states can have a minimum level of expenditure. As per the recommendation of 14th finance commission the allocation depends on following percentages
Population -17.5%, Demographic Change -10%, Income Distance -50%, Area -15%, Forest Cover 7.5%.