FINANCE COMMISSION GRANTS TO PANCHAYATI RAJ INSTITUTIONS

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.

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

Statement 1 is incorrect: The National Development Council (NDC) is not an organ of the Planning Commission. It's an independent advisory body headed by the Prime Minister and includes Chief Ministers of all states, Union Cabinet Ministers, and members of the NITI Aayog (successor to the Planning Commission). It was set up on 6 August 1952. Statement 2 is correct: Economic and Social Planning is listed in the Concurrent List (List III) of the Seventh Schedule of the Indian Constitution. Statement 3 is correct: The Constitution (Article 243G) empowers Panchayats (local village governments) to prepare plans for economic development and social justice at the village level. This promotes decentralized planning and community participation. Hence, statement one is incorrect and statements two and three are correct. _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._

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 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.

* Statement 1 is correct: As per Article 244(1) of the Constitution's Fifth Schedule, Scheduled Areas are areas that the President may declare to be such by order after consultation with the Governor of that State.  * Statement 2 is correct: District is considered as the largest administrative unit which forms the Scheduled Area while the lowest administrative unit is the cluster of villages in the Block.  * Statement 3 is incorrect: The Fifth Schedule to the Constitution of India states in para 3 that the Governor of each State having Scheduled Areas therein shall annually, or whenever so required by the President, make a report to the President regarding the administration of the Scheduled Areas in that State and the executive power of the Union shall extend to the giving of directions to the State as to the Administration of the said areas.

Among the listed bodies, only the Inter-State Council is established by the Constitution of India. The others are based on statutory or executive provisions. ✅ I. Inter-State Council – Correct
* Established under Article 263 of the Constitution to facilitate Centre-State coordination. ❌ II. National Security Council – Incorrect
* Formed in 1998 by an executive order, not mentioned in the Constitution. ❌ III. Zonal Councils – Incorrect
* Established under the States Reorganisation Act, 1956, a statutory but non-constitutional body.

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.

Statement 1 is incorrect: The President of India, not the Governor of a State, has the power to specify a community as a Scheduled Tribe (ST) for a particular state or Union Territory. This is done through a notification in the Official Gazette, after consultation with the concerned State government. Statement 2 is correct: The specification of Scheduled Tribes is not uniform across the country. A community recognized as an ST in one State may not be recognized as such in another State. This is because the criteria for scheduling are based on social, educational, and economic backwardness, which can vary across regions.

The Fifth Schedule of the Constitution deals with the administration and control of Scheduled Areas as well as of Scheduled Tribes residing in any State other than the States of Assam, Meghalaya, Tripura, and Mizoram. The governor can make regulations for the peace and good government of a scheduled area after consulting the tribes' advisory council. Such regulations may prohibit or restrict the transfer of land by tribal to non tribal members or among members of the scheduled tribes, and regulate the allotment of land to members of the scheduled tribes. Option B is incorrect. According to the provisions of Paragraph 4, under Article 244(1) of the Fifth Schedule of the Constitution of India, the Tribes Advisory Councils (TAC) shall be established in each State having Scheduled Areas therein and, if the President so directs, also in any State having Scheduled Tribes but not Scheduled Areas. The tribal advisory council is an advisory body, not a governing body. Option C is incorrect. Bringing any particular area under the Fifth Schedule of the Constitution of India does not convert the area into a Union Territory. Option D is incorrect. Bringing any particular area under the Fifth Schedule of the Constitution of India does not get declared as a Special Category State.

Statement 1 is incorrect. The Finance Commission is a constitutional body established under Article 280 of the Indian Constitution, not a statutory body. Statement 2 is correct as the article explicitly states, 'Once the recommendations of the Finance Commission, which is a constitutional body, are accepted by the Government and are laid before the Parliament, the same cannot be altered.' Statement 3 is correct as the article details '15th Finance Commission grants released to Rural Local Bodies (RLBs) across states'.

Statement 1 is incorrect. The article states, 'Panchayat, being “Local Self Government”, is a state subject.' This means it falls under the State List, not the Union List. Statement 2 is correct as the article mentions, 'The preparation of GPDPs is undertaken annually through a participatory process involving Gram Sabhas'. Statement 3 is correct as the article describes eGramSwaraj as 'a comprehensive digital platform for planning, budgeting, accounting, and monitoring of Panchayat activities'.

The article explicitly states that the 'Status of Devolution to Panchayats in States - An Indicative Evidence-Based Ranking, 2024' report assesses devolution based on six identified dimensions: Framework, Functions, Finances, Functionaries, Capacity Enhancement, and Accountability. Infrastructure Development is not listed as one of these six dimensions in the article.