Q481. The First State Finance Commission of Rajasthan recommended the allocation of what percentage of the state’s net tax revenue to local bodies?
Rajasthan Economy: RAS Prelims MCQs
721 RAS Prelims practice MCQs on the economy of Rajasthan are on this page, in 11 chapters. They cover the macro overview and State budget, agriculture, industry, the service sector, energy and transport infrastructure, rural development and Panchayati Raj, the State Finance Commission, education, health and the major welfare schemes. Each question has an answer and an explanation.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 481–490 of 721 questions
Browse Rajasthan Economy chapters
Q482. Consider the following statements regarding the evolution of the devolution framework in Rajasthan:
Statement I: Successive State Finance Commissions have gradually increased the percentage share of local bodies in the state’s divisible pool.
Statement II: The criteria for horizontal distribution have evolved to include elements like performance and financial management.
Which of the above statement(s) is/are correct?
Statement I: Successive State Finance Commissions have gradually increased the percentage share of local bodies in the state’s divisible pool.
Statement II: The criteria for horizontal distribution have evolved to include elements like performance and financial management.
Which of the above statement(s) is/are correct?
Explanation
Over time, successive State Finance Commissions in Rajasthan have generally recommended a higher percentage of state revenue for local bodies to reflect their growing responsibilities. Additionally, the criteria for horizontal distribution have become more sophisticated, incorporating performance metrics and financial management reforms. These changes aim to balance the need for increased funding with the objective of promoting efficient and accountable local self-governance.
Q483. Consider the following statements about the rules governing the State Finance Commission:
I. The Governor constitutes the State Finance Commission every five years or earlier.
II. The Legislature of a State may by law determine the requisite qualifications for its members.
III. The recommendations of the SFC are legally binding on the State Government.
IV. The SFC submits its report directly to the President of India.
Which of the above statement(s) is/are correct?
I. The Governor constitutes the State Finance Commission every five years or earlier.
II. The Legislature of a State may by law determine the requisite qualifications for its members.
III. The recommendations of the SFC are legally binding on the State Government.
IV. The SFC submits its report directly to the President of India.
Which of the above statement(s) is/are correct?
Explanation
The Governor is constitutionally required to constitute the State Finance Commission every five years. The state legislature determines the qualifications and selection process for its members by law. While the commission’s recommendations carry significant weight, they are advisory rather than legally binding. Furthermore, the SFC submits its report to the Governor for presentation to the state legislature, not directly to the President.
Q484. What is the standard periodicity for the constitution of a State Finance Commission as per the Constitution of India?
Explanation
According to the Constitution of India, the State Finance Commission must be constituted every five years. This periodic establishment ensures that the financial health of local bodies is reviewed regularly and that devolution formulas are updated to reflect changing economic conditions. The Governor of each state is responsible for initiating this process, which is essential for maintaining the financial stability of local self-government institutions.
Q485. Consider the following functions and identify which ones are performed by the State Finance Commission:
I. Reviewing the financial position of Panchayats
II. Recommending the distribution of net proceeds of state taxes
III. Determining the principles for grants-in-aid to municipalities
IV. Suggesting measures to improve the financial position of local bodies
V. Conducting the daily financial audit of Zila Parishads
Which of the above statement(s) is/are correct?
I. Reviewing the financial position of Panchayats
II. Recommending the distribution of net proceeds of state taxes
III. Determining the principles for grants-in-aid to municipalities
IV. Suggesting measures to improve the financial position of local bodies
V. Conducting the daily financial audit of Zila Parishads
Which of the above statement(s) is/are correct?
Explanation
The State Finance Commission reviews the finances of Panchayats, recommends the distribution of net State tax proceeds, sets principles for grants-in-aid to municipalities and suggests ways to improve local body finances. It does not do the daily audit of Zila Parishads, so V is wrong.
Q486. Which of the following defines the "Divisible Pool" in state-local fiscal relations?
Explanation
The divisible pool refers to the total amount of state-collected tax revenue that the State Finance Commission considers for distribution to local bodies. This pool typically includes various state taxes, duties, and tolls after deducting collection costs. It forms the base from which the vertical devolution percentage is calculated, ensuring that local governments receive a share of the state’s primary financial resources.
Q487. When recommending horizontal devolution among individual local bodies, State Finance Commissions use various criteria. Which of the following is a generally accepted criterion?
Explanation
When recommending horizontal devolution, State Finance Commissions use objective criteria such as population and geographic area. Population reflects the demand for services, while area accounts for the costs associated with serving sparse regions. These factors ensure that funds are distributed based on actual needs and physical challenges rather than political affiliations or proximity to administrative centers, promoting equity among all local government units.
Q488. Match the following devolution weightage criteria in List I with their primary rationale in
List II:
List I: (Devolution Weightage Criteria)
A. Population
B. Area
C. Income distance/Backwardness
D. Tax effort/Performance
List II: (Primary Rationale)
i. Ensures equity by providing more to poorer areas
ii. Addresses the scale of service delivery required
iii. Incentivizes better own source revenue collection
iv. Compensates for higher costs of service provision in sparse regions
List II:
List I: (Devolution Weightage Criteria)
A. Population
B. Area
C. Income distance/Backwardness
D. Tax effort/Performance
List II: (Primary Rationale)
i. Ensures equity by providing more to poorer areas
ii. Addresses the scale of service delivery required
iii. Incentivizes better own source revenue collection
iv. Compensates for higher costs of service provision in sparse regions
Explanation
Devolution criteria serve specific goals. Population reflects the scale of service delivery needs, while area compensates for the higher costs of providing amenities in vast, sparsely populated regions. Income distance ensures equity by providing more support to backward areas. Finally, tax effort or performance metrics incentivize local bodies to improve their own revenue collection, balancing the need for support with the goal of fiscal responsibility.
Q489. Grants-in-aid recommended by the State Finance Commission are disbursed from the:
Explanation
Grants-in-aid and devolved tax shares recommended by the State Finance Commission are disbursed from the Consolidated Fund of the State. This fund contains all revenues received by the state government, including taxes and loans. The constitutional framework ensures that transfers to local bodies are made through this primary treasury, providing a formal and legal channel for the flow of financial resources to local governments.
Q490. Consider the following statements regarding the own source revenue of Panchayats:
Statement I: It includes revenues generated from property tax, vehicle tax, and fees on markets.
Statement II: A robust own source revenue base reduces the fiscal dependency of Panchayats on the State Government.
Which of the above statement(s) is/are correct?
Statement I: It includes revenues generated from property tax, vehicle tax, and fees on markets.
Statement II: A robust own source revenue base reduces the fiscal dependency of Panchayats on the State Government.
Which of the above statement(s) is/are correct?
Explanation
Panchayats can generate their own revenue through various local taxes and fees, such as property tax and market charges. A strong own-source revenue base is vital because it reduces dependence on state transfers and enhances functional autonomy. When local bodies raise their own funds, they gain more flexibility in spending and become more accountable to their residents for the quality of local services.Answer key for these questions
| Q | Correct answer |
|---|---|
| 481 | (a) 2.18% |
| 482 | (c) Both Statement I and Statement II |
| 483 | (a) I and II |
| 484 | (c) Every 5 years |
| 485 | (b) I, II, III and IV |
| 486 | (d) The portion of the state’s own tax revenue that is eligible for sharing with local bodies |
| 487 | (b) The demographic profile and geographic area of the local body |
| 488 | (a) A-ii, B-iv, C-i, D-iii |
| 489 | (d) Consolidated Fund of the State |
| 490 | (c) Both Statement I and Statement II |
Key facts from Rajasthan Economy
- The RPSC syllabus lists the economy of Rajasthan as the second part of the Economy paper.
- Many questions ask for a Rajasthan-specific fact: a scheme, a year, a district or an institution.
- The State budget chapter tests terms such as revenue deficit and fiscal deficit through the FRBM Act and the State’s debt.
- Infrastructure chapters cover solar and wind energy, DISCOM finances, highways, the DMIC and the Jaipur Metro.
- The national economy chapters are on the Indian Economy page.
Frequently asked questions
How many RAS Prelims practice MCQs are there on Rajasthan Economy?
This page has 721 practice MCQs on Rajasthan Economy. Each has the correct answer, and most have an explanation.
Which chapters does the Rajasthan economy set cover?
Eleven chapters: macro overview and State budget; agriculture; industry; the service sector; energy infrastructure; transportation and communication; rural development and Panchayati Raj; State Finance Commission and fiscal devolution; education; health; and the major welfare schemes of the Rajasthan Government.
Is the Rajasthan economy in the RAS Prelims syllabus?
Yes. RPSC lists the economy of Rajasthan as the second part of the Economy paper, after economic concepts and the Indian economy, so both parts are examined in the same paper.
How can I prepare the Rajasthan economy chapters?
Keep a list of schemes with their year, objective and target group, and a list of district-wise crops and industries. Attempt each chapter, read the explanation of every miss and revise the list a few days later.