Himachal wants high level committee to assess financial impact; Punjab wants Special Category Status

Based on principles of need, equity and performance, overall devolution formula is as given in the chart:

The 15th Finance Commission made recommendations to promote better fiscal discipline, education, and agriculture reforms, while adjusting tax devolution among states. ✅ Statement I: Correct 4,800 crores were recommended (2022–23 to 2025–26) to incentivize states for improving educational outcomes. ❌ Statement II: Incorrect The Commission recommended 41% of Union taxes to be shared with states, not 45%. ✅ Statement III: Correct It proposed a ₹45,000 crore performance-based incentive for states to implement agricultural reforms. ✅ Statement IV: Correct It reintroduced the 'tax effort' criterion, rewarding states that better mobilize revenue in relation to their GSDP.

Statement 1 is Correct: The Fourteenth Finance Commission indeed increased the devolution of tax revenue from the central government to the states. Statement 2 is Incorrect: While promoting formula-based devolution, the commission does not provide recommendations regarding sector-specific grants to ensure focus on critical areas.

Statement I is Correct: Any change in the Union List alters the distribution of legislative powers and requires ratification by at least half of the State Legislatures. Statement II is Correct: Changes affecting the extent of a State’s executive power also need ratification by not less than one-half of the States. Statement III is Incorrect: Conditions of the Governor’s office can be amended by Parliament alone and do not require ratification by States.

Statement 1 is correct. The Fiscal Responsibility and Budget Management (FRBM) Review Committee Report indeed recommended a debt-to-GDP ratio of 60% for the general (combined) government by 2023, with 40% for the Central Government and 20% for the State Governments. This recommendation aimed to ensure fiscal discipline and sustainability. Statement 2 is not correct. The Central Government has domestic liabilities of 46.1% of GDP (2016-17) and as a percentage of GDP, States liabilities increased to 23.2 per cent at end-March 2016. Statement 3 is correct. The Constitution of India empowers State Governments to borrow only from domestic sources (Article 293(1)). Further, as long as a State has outstanding borrowings from the Central Government, it is required to obtain the Central Government's prior approval before incurring debt (Article 293 (3)).

Option A is correct. In a federal system, power is distributed between the central government and the states. There can be disputes about the division of power or interpretation of the Constitution.
An independent judiciary acts as an impartial umpire to settle these disputes and uphold the Constitution. It ensures that both the central government and the states function within their constitutional boundaries.The other options, while relevant to Indian polity, are not exclusive to federal systems Option B is incorrect. The Union Legislature having elected representatives from constituent units is a common feature in both federal and some unitary states with devolved power. Option C is incorrect. The Union Cabinet having elected representatives from regional parties is not a defining characteristic of federalism. Political party affiliation doesn't necessarily determine the federal structure. Option D is incorrect. The Fundamental Rights being enforceable by Courts of Law, while essential for a democracy, this feature exists even in some non-federal states.

When an area is declared a Scheduled Area under the Fifth Schedule of the Constitution, it continues to be administered by the State Government, but with special powers granted to the Governor for tribal welfare. ❌ Statement I: Incorrect The State Government does not lose its executive powers. There is no provision for a local body to take over full administration. ❌ Statement II: Incorrect The Union Government cannot take over total administration of Scheduled Areas under the Fifth Schedule, even on the Governor’s recommendation.

The National Development Council (NDC) in India is comprised of the following members: * The Prime Minister (who chairs the council)
* Ministers of the Union Cabinet
* Chief Ministers of the States The Chairman, Finance Commission - while the Finance Commission plays a crucial role in recommending the devolution of financial resources from the central government to the states, the Chairman is not a member of the NDC. _Note: While the NDC was proposed to be abolished, it has not been formally dissolved, although its powers have largely been transferred to the NITI Aayog's Governing Council._

Indian federalism is characterized by key features such as an independent judiciary, a clear division of powers between the Centre and the States, and unequal representation of States in the Rajya Sabha, all of which are enshrined in the Indian Constitution. However, unlike classical federations like the United States, Indian federalism is not the outcome of an agreement among the federating units. The Indian Constitution, which lays down the framework for India's federal structure, was not created through an agreement among the federating units but was adopted by the Constituent Assembly of India.

Statement 1 is Incorrect: The Revamped Rashtriya Gram Swaraj Abhiyan (RGSA) was approved by the Cabinet Committee on Economic Affairs for implementation from 1st April 2022 to 31st March 2026 (co-terminus with the 15th Finance Commission period), not from 1st April 2021. Statement 2 is Correct: The primary objective of the revamped scheme is to develop and enhance the governance capabilities of Panchayati Raj Institutions (PRIs) so they can effectively deliver on the Sustainable Development Goals (SDGs). It focuses on the localization of SDGs at the grassroots level through inclusive local governance. Statement 3 is Incorrect: The Revamped RGSA is a Centrally Sponsored Scheme, meaning the funding is shared between the Centre and the States. It is not 100% centrally funded for all States and UTs. The sharing pattern is 60:40 (Centre:State) for general category States, and 90:10 for North-Eastern States, Hilly States, and the Union Territory of Jammu & Kashmir. 100% Central funding applies only to other Union Territories and specific Central components of the scheme. Therefore, option B is the correct answer.