The Finance Commissions Central & States GK MCQs With Answer & Explanation in English article provides a comprehensive set of multiple-choice questions aimed at enhancing your knowledge of India’s finance commissions.
Whether you’re preparing for competitive exams or simply wish to understand how financial relations between the central and state governments function, this article offers valuable insights. Dive into detailed explanations and answers to each MCQ to strengthen your grasp on the topic.
1. Which among the following is the constitutional body appointed by the President, every five years to review centre-state financial relationships?
- Finance Commission
- Inter State Commission
- Inter State Council
- Monetary Committee
Show Answer
Answer: Finance Commission
The Finance Commission of India is established by the President of India as per Article 280 of the Constitution. It is tasked with making recommendations to the President about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves.
2. Who among the following determines the qualifications which shall be requisite for appointment as members of the Finance Commission in India?
- President of India
- Council of Ministers
- Parliament by an act
- Union Cabinet
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Answer: Parliament by an act
Article 280(2)(2) of the Constitution empowers the Parliament to determine the qualifications which shall be requisite for appointment as members of the Finance Commission and the manner in which they shall be selected. In accordance with this article, the parliament enacted the Finance Commission (Miscellaneous Provisions) Act 1951.
3. The provision for having a Finance Commission to sort out the revenue-sharing arrangement between states and the Centre is part of the Constitution under which among the following articles?
- Article 275
- Article 280
- Article 282
- Article 281
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Answer: Article 280
Article 280 of the Indian Constitution defines the scope of the Finance Commission, constituted to make recommendations to the President about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same among the States themselves.
4. The Chairman of the Finance Commission is the ex-officio Chairman of:
- Monetary Policy Committee
- Tax Policy Council
- Tax Policy Research Unit (TPRU)
- 2 & 3 Only
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Answer: 2 & 3 Only
The Chairman of the Finance Commission is not the ex-officio Chairman of the Monetary Policy Committee. However, the Chairman of the Finance Commission is the ex-officio Chairman of the Tax Policy Council and the Tax Policy Research Unit (TPRU).
5. Which of the following statements is an incorrect statement about the Finance Commission?
- It lays down the principles that govern the grants-in-aid to the states by the Centre.
- It suggests the measures needed to augment the consolidated fund of a state and to supplement the resources of the panchayats and the Municipalities in the state.
- It sets interest rates, which determine the cost of borrowing and the return on savings.
- All are correct
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Answer: It sets interest rates, which determine the cost of borrowing and the return on savings.
The Finance Commission does not set interest rates. Interest rates on borrowing and the return on savings come under the purview of the Monetary Policy, which is managed by the Reserve Bank of India (RBI).
6. Which article of the Constitution of India provides for a Finance Commission?
- Article 250
- Article 260
- Article 270
- Article 280
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Answer: Article 280
Article 280 of the Constitution of India provides for a Finance Commission as a quasi-judicial body. The Constitution empowers the Parliament of India to determine the qualifications of members of the commission and the manner in which they should be selected.
7. Who constitutes the Finance Commission of India?
- President
- Parliament
- Prime Minister
- Speaker
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Answer: President
The Finance Commission of India is constituted by the President of India as per Article 280 of the Indian Constitution every fifth year or at such earlier time as he considers necessary.
8. Who appoints the members of the Finance Commission?
- Parliament
- President
- Prime Minister
- Supreme Court
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Answer: President
The Finance Commission of India consists of a chairman and four other members who are appointed by the President of India. The members hold office for such a period as specified by the President in his order.
9. Who is authorised to determine the qualifications of members of the Finance Commission and the manner in which they should be selected?
- Supreme Court
- Parliament
- Prime Minister
- President
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Answer: Parliament
The Constitution of India empowers the Parliament to determine the qualifications of members of the Finance Commission and the manner in which they should be selected.
10. The Finance Commission submits its report to which of the following?
- President
- Parliament
- Prime Minister
- Speaker
Show Answer
Answer: President
The Finance Commission of India submits its report to the President of India. The President lays it before both the Houses of Parliament along with an explanatory memorandum as to the action taken on its recommendations.
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