Q11. Who was the Chairman of the First State Finance Commission of Rajasthan?
State Finance Commission and Fiscal Devolution in Rajasthan: RAS Prelims MCQs
59 RAS Prelims MCQs on the State Finance Commission and fiscal devolution in Rajasthan cover the constitutional provisions, the chairpersons, the criteria for sharing funds with local bodies and the audit of local finances. The Articles, the first chairman, the order of chairpersons and the problems of implementation are asked as facts and statements.
Practice questions based on the RPSC RAS Prelims syllabus. They follow the exam pattern but are not past-paper questions.
Showing 11–20 of 59 questions
Q12. Which of the following is NOT typically an own source revenue for Panchayats?
Explanation
Own-source revenue for Panchayats typically includes local levies such as property tax, professional tax, and fees collected from rural markets or fairs. These are authorized by state laws to promote local autonomy. In contrast, customs duty is a central tax levied by the Union Government on international trade. Local bodies do not have the constitutional authority to collect such national duties.
Q13. Match the following State Finance Commissions of Rajasthan in List I with their respective Chairpersons in List II:
| State Finance Commission | Chairperson |
|---|---|
| A. First SFC | i. B.D. Kalla |
| B. Second SFC | ii. K.K. Goyal |
| C. Fourth SFC | iii. Pradyuman Singh |
| D. Sixth SFC | iv. Hira Lal Devpura |
Explanation
The leadership of the Rajasthan State Finance Commission has changed periodically. K.K. Goyal chaired the first commission, while Hira Lal Devpura led the second. The fourth commission was headed by B.D. Kalla, and the sixth commission is currently led by Pradyuman Singh. These chairpersons guide the commission in recommending the share of state taxes to be devolved to local bodies.
Q14. The own source revenue generation by Urban Local Bodies faces significant challenges. Which of the following is a major administrative challenge in this context?
Explanation
Urban Local Bodies struggle with revenue generation due to significant administrative hurdles. Major issues include the lack of regular property value assessments and inefficient systems for collecting taxes. These challenges lead to a substantial gap between the potential and actual revenue collected. Strengthening administrative procedures and updating valuation methods are necessary steps to improve the financial self-sufficiency of these urban institutions.
Q15. Identify the incorrect statement regarding the own source revenue of local bodies in Rajasthan:
Explanation
Local bodies in Rajasthan have the authority to collect specific taxes and user charges, such as property tax and water fees, as permitted by state legislation.
Q16. Consider the following statements regarding the 15th Finance Commission grants to local bodies:
I. It recommended both tied and untied grants for local bodies.
II. Tied grants were primarily allocated for national priorities like drinking water and solid waste management.
III. It excluded Cantonment Boards completely from receiving any financial grants.
IV. The grants aimed to strengthen the capacity of local bodies to deliver basic services.
Which of the above statement(s) is/are correct?
I. It recommended both tied and untied grants for local bodies.
II. Tied grants were primarily allocated for national priorities like drinking water and solid waste management.
III. It excluded Cantonment Boards completely from receiving any financial grants.
IV. The grants aimed to strengthen the capacity of local bodies to deliver basic services.
Which of the above statement(s) is/are correct?
Explanation
The 15th Finance Commission introduced a mix of tied and untied grants to strengthen local governance. Tied grants focus on national priorities like water management and sanitation, while untied grants allow for local flexibility. These grants are designed to improve service delivery capacity. Notably, even Cantonment Boards were included in certain recommendations to ensure comprehensive coverage of local administrative units.
Q17. What is the most appropriate distinction between tied and untied grants provided to local bodies?
Explanation
The primary difference between grant types lies in their usage flexibility. Tied grants are earmarked for specific government priorities, such as sanitation or water conservation, ensuring targeted developmental outcomes. Untied grants provide local bodies with the autonomy to allocate funds based on their unique local requirements. This combination balances the achievement of national goals with the empowerment of local decision-making.
Q18. The significance of untied grants for local bodies primarily lies in:
Explanation
Untied grants are crucial for promoting local self-governance as they provide flexibility in expenditure. Unlike tied grants, which are restricted to specific sectors, untied funds allow local bodies to prioritize projects based on immediate community needs. This financial freedom supports decentralized planning and empowers local representatives to make decisions that best reflect the priorities of their specific jurisdictions and residents.
Q19. Consider the following statements regarding the capacity building of local bodies:
Statement I: Capacity building in financial management is essential for local bodies to effectively utilize devolved funds.
Statement II: Modern accounting software and proper auditing standards are tools used to enhance the financial capacity of local bodies.
Which of the above statement(s) is/are correct?
Statement I: Capacity building in financial management is essential for local bodies to effectively utilize devolved funds.
Statement II: Modern accounting software and proper auditing standards are tools used to enhance the financial capacity of local bodies.
Which of the above statement(s) is/are correct?
Explanation
Effective fiscal management is vital for the successful utilization of devolved funds by local bodies. Capacity building involves training officials and adopting modern tools like specialized accounting software and auditing standards. These measures ensure that financial resources are tracked accurately and used efficiently. Improving these internal systems is essential for maintaining transparency, accountability, and the overall administrative health of local institutions.
Q20. Consider the following statements concerning the audit and accountability of local body finances:
I. Timely auditing is a prerequisite for receiving certain performance grants.
II. The Comptroller and Auditor General (CAG) provides Technical Guidance and Support (TGS) for local body audits.
III. Social audit is a mechanism used exclusively for urban local bodies, not for Panchayats.
IV. Audit reports of local bodies are never required to be placed before the State Legislature.
V. Local Fund Audit Departments at the state level conduct the primary statutory audit of local bodies.
Which of the above statement(s) is/are incorrect?
I. Timely auditing is a prerequisite for receiving certain performance grants.
II. The Comptroller and Auditor General (CAG) provides Technical Guidance and Support (TGS) for local body audits.
III. Social audit is a mechanism used exclusively for urban local bodies, not for Panchayats.
IV. Audit reports of local bodies are never required to be placed before the State Legislature.
V. Local Fund Audit Departments at the state level conduct the primary statutory audit of local bodies.
Which of the above statement(s) is/are incorrect?
Explanation
Auditing standards and technical support from the Comptroller and Auditor General are vital for local body accountability. Social audits are a key mechanism used for Panchayats, not just urban bodies. Additionally, audit reports must be presented to the state legislature for oversight. The Local Fund Audit Department remains the primary statutory authority responsible for checking the accounts of local government institutions.Answer key for these questions
| Q | Correct answer |
|---|---|
| 11 | (c) K.K. Goyal |
| 12 | (d) Customs duty |
| 13 | (a) A-ii, B-iv, C-i, D-iii |
| 14 | (b) Poor periodic assessment and low collection efficiency of property tax |
| 15 | (b) The autonomous power to introduce new income taxes within their jurisdiction without state approval. |
| 16 | (b) I, II and IV |
| 17 | (c) Tied grants are for specific sectors, while untied grants are for locally identified needs at the body’s discretion. |
| 18 | (d) Enhancing local autonomy and decentralization of planning |
| 19 | (c) Both Statement I and Statement II is correct |
| 20 | (b) III and IV |
Key facts from State Finance Commission and Fiscal Devolution in Rajasthan
- The State Finance Commission is constituted under Article 243I to review the financial position of Panchayats; Article 243Y applies to Municipalities.
- K. K. Goyal chaired the First State Finance Commission of Rajasthan; the order of chairpersons is K. K. Goyal, Hira Lal Devpura, Manik Chand Surana and B. D. Kalla.
- Horizontal devolution among local bodies is based on weighted criteria, and the population of the local body is the main one.
- Untied grants strengthen local autonomy and decentralised planning.
- The Local Fund Audit Department conducts the statutory audit of Panchayati Raj Institutions.
- State Finance Commissions have recommended a share of royalties from minor minerals for local bodies; a gap between recommendations and implementation causes fiscal stress.
Frequently asked questions
How many RAS Prelims practice MCQs are there on State Finance Commission and Fiscal Devolution in Rajasthan?
This page has 59 practice MCQs on State Finance Commission and Fiscal Devolution in Rajasthan (Rajasthan Economy). Each has the correct answer, and most have an explanation.
Under which Article is the State Finance Commission constituted?
Article 243I for Panchayats, and Article 243Y extends the same review to Municipalities. The Governor constitutes the Commission every five years to review local body finances and to recommend how funds should be shared with them.
Who chaired the first State Finance Commission of Rajasthan?
K. K. Goyal. The later chairpersons, in order, were Hira Lal Devpura, Manik Chand Surana and B. D. Kalla, each for a five-year term, so the Commission has been reconstituted regularly.
Who audits the Panchayati Raj Institutions in Rajasthan?
The Local Fund Audit Department conducts the statutory audit of the accounts of Panchayati Raj Institutions. The audit checks that grants and funds are spent as the rules allow.