Q51. When the State Finance Commission determines the vertical devolution formula, the divisible pool generally excludes:
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 51–59 of 59 questions
Q52. The transition from Annual Rental Value (ARV) to Unit Area Method (UAM) in Urban Local Bodies is a reform primarily intended to:
Explanation
Transitioning from the Annual Rental Value method to the Unit Area Method is a major reform in urban finance. The Unit Area Method uses objective factors like location and usage to calculate tax, making the process more transparent and predictable. This rationalization helps reduce arbitrary assessments and improves collection efficiency. It is a key step toward making property tax a more reliable and substantial source of revenue for municipalities.
Q53. Consider the following statements regarding the 15th Finance Commission’s recommendations for local bodies:
I. It mandated that a portion of the grants must be tied to drinking water, rainwater harvesting, and sanitation.
II. It recommended entry-level conditions such as the online availability of both provisional and audited accounts.
III. It suggested withdrawing all grants if state governments fail to constitute State Finance Commissions.
Which of the above statement(s) is/are correct?
I. It mandated that a portion of the grants must be tied to drinking water, rainwater harvesting, and sanitation.
II. It recommended entry-level conditions such as the online availability of both provisional and audited accounts.
III. It suggested withdrawing all grants if state governments fail to constitute State Finance Commissions.
Which of the above statement(s) is/are correct?
Explanation
The 15th Finance Commission set strict guidelines to improve local body performance. It mandated that grants be tied to critical sectors like sanitation and water harvesting. It also introduced entry-level conditions, including the requirement for online audited accounts. Furthermore, it emphasized that state governments must constitute their own State Finance Commissions to remain eligible for central grants, highlighting the importance of a functional and integrated fiscal devolution system.
Q54. According to recent 15th Finance Commission guidelines, what is the generally mandated ratio between basic (untied) grants and tied grants for rural local bodies for the 2021-26 period?
Explanation
For the 2021-26 period, the 15th Finance Commission recommended a specific ratio for rural local body grants, typically allocating 40% as untied (basic) grants and 60% as tied grants. The tied portion is specifically earmarked for national priorities such as sanitation and water supply. This ratio aims to provide local bodies with some discretionary funds while ensuring that critical public health and environmental sectors receive adequate and guaranteed funding.
Q55. Capacity building of local bodies involves training of elected representatives and functionaries. In Rajasthan, which apex institute is primarily responsible for the training of Panchayati Raj functionaries?
Explanation
The Indira Gandhi Panchayati Raj & Gramin Vikas Sansthan serves as the apex training institute in Rajasthan for rural development and local governance. It is responsible for building the capacity of elected representatives and administrative officials within the Panchayati Raj system. Through regular training programs, it enhances their knowledge of financial management, legal provisions, and developmental planning, ensuring more effective leadership and administration at the grassroots level.
Q56. To ensure accountability and transparency in financial management, which accounting and e-governance software is widely utilized by Gram Panchayats across India, including Rajasthan?
Explanation
e-GramSwaraj is a comprehensive digital platform designed to improve transparency and accountability in Panchayati Raj Institutions. It integrates various functions, including planning, accounting, and monitoring of developmental works. By using this software, Gram Panchayats can maintain digital records of their expenditures and project progress. This nationwide initiative helps standardize financial reporting and makes local body data more accessible to both the government and the general public.
Q57. In the context of state-local finances, what does the term "fiscal gap" signify?
Explanation
The fiscal gap represents the difference between the total funds a local body needs to provide essential services and the amount it can generate through its own taxes and fees. Identifying this gap is a primary function of the State Finance Commission. Recommendations for grants-in-aid and tax devolutions are specifically designed to bridge this shortfall, ensuring that local bodies can meet their operational and developmental requirements.
Q58. Which of the following statements correctly identifies a recommendation pattern typically observed in Rajasthan State Finance Commissions regarding royalties?
Explanation
Rajasthan State Finance Commissions typically recommend that a specific percentage of royalties from minor minerals be shared with local Panchayati Raj Institutions.
Q59. Consider the following factors that cause inter-district fiscal disparities in Rajasthan:
I. Uneven distribution of natural resources and industries
II. Variations in population density and terrain
III. Differences in local administrative and tax collection efficiency
IV. Uniform allocation of untied grants by the SFC
Which of the above factors are actual causes of disparities?
I. Uneven distribution of natural resources and industries
II. Variations in population density and terrain
III. Differences in local administrative and tax collection efficiency
IV. Uniform allocation of untied grants by the SFC
Which of the above factors are actual causes of disparities?
Explanation
Uneven resources and industries, differences in population density and terrain and differences in tax collection efficiency cause inter-district fiscal disparities. Uniform allocation of untied grants does not cause them, so IV is wrong.Answer key for these questions
| Q | Correct answer |
|---|---|
| 51 | (a) Cost of tax collection |
| 52 | (c) Rationalize and improve the assessment and collection of property tax |
| 53 | (d) I, II and III |
| 54 | (c) 40% Basic and 60% Tied |
| 55 | (d) Indira Gandhi Panchayati Raj & Gramin Vikas Sansthan (IGPR&GVS) |
| 56 | (c) e-GramSwaraj |
| 57 | (a) The gap between a local body’s expenditure needs and its own revenue-raising capacity |
| 58 | (b) A specific percentage of royalties from minor minerals shared with local Panchayati Raj Institutions |
| 59 | (b) I, II and III |
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.