- Options 2 and 4 actually increase the fiscal deficit.
- Kelkar committee report has told about four ways to cut fiscal deficit namely,
Tax measures and better administration.
Increase disinvestment proceeds
Cutting down subsidies
Right sizing plan expenditure.
- Cutting the plan expenditure would eventually prove a negative influence in the long run, the correct word is right sizing as in rightsizing both increase and decrease can happen.
- Statement 1 is correct: It is mentioned under Article 280(3).
- Statement 2 is incorrect: The divisible pool consists of all taxes except surcharges and cess levied for specific purpose.
- Statement 3 is correct: FFC has increased the share of the states in the central divisible pool from the current 32 percent to 42, which is the biggest devolution ever.
- The weightages as per 14th Finance Commission are:
50% Income Distance
Population and Demographic change: 27.5% (17.5% as per 1971 Census and 10% as per 2011 Census)
Forest Cover: 7.5%
Thus, 1 is correct.
- As per 14th FC, Income distance is the distance of the Gross State Domestic Product (GSDP) of a particular state from the state with the highest GSDP. Thus, 2 is incorrect.
- The Income Distance is a measure of a state’s backwardness. It is higher for lower income states. Thus, 3 is also incorrect.
- There will be a dispute settlement authority to resolve disputes between the center and the states and among the states.
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