Match List-I with List-II and select the correct answer by using the codes given below regarding the Fifteenth Finance Commission recommendations related to certain Horizontal Devolution Criteria:
List-I (Horizontal Devolution Criteria) - List-II (Weights %)
(i) Population - (a) 10%
(ii) Forest & Ecology - (b) 15%
(iii) Income Distance - (c) 12.5%
(iv) Demographic Performance - (d) 45%

Question

Match List-I with List-II and select the correct answer by using the codes given below regarding the Fifteenth Finance Commission recommendations related to certain Horizontal Devolution Criteria: 
List-I (Horizontal Devolution Criteria) -  List-II (Weights %)
(i) Population - (a) 10%
(ii) Forest & Ecology - (b) 15% 
(iii) Income Distance - (c) 12.5%
(iv) Demographic Performance - (d) 45%

Accepted Answer

The correct option is 3:

Students, the Finance Commission is a crucial constitutional body in India responsible for recommending the distribution of tax revenues between the Union (Central) government and the States (Vertical Devolution) and among the States themselves (Horizontal Devolution). The question focuses on the weights assigned to various criteria for horizontal devolution by the Fifteenth Finance Commission (15th FC) for the period 2021-2026. The 15th FC, headed by N.K. Singh, introduced significant changes, particularly by giving substantial weight to 'Income Distance' and introducing 'Demographic Performance' as a criterion to reward states for efforts in population control.

Based on the 15th FC's final recommendations (2021-2026 report), the correct matching is as follows:
(i) Population (2011) was assigned a weight of 15% (Matching with b).
(ii) Forest & Ecology was assigned a weight of 10% (Matching with a).
(iii) Income Distance, which measures the distance of a state's per capita income from the state with the highest per capita income, received the highest weight of 45% (Matching with d).
(iv) Demographic Performance, which rewards states that have achieved lower fertility rates, was assigned a weight of 12.5% (Matching with c).

Therefore, the correct combination is (i)-(b), (ii)-(a), (iii)-(d), (iv)-(c), which corresponds precisely to Option 3. This structure reflects the commission’s priorities, balancing the need for equity (Income Distance and Population) with incentives for performance (Demographic Performance) and environmental protection (Forest & Ecology).

The incorrect option is 1:

Option 1 suggests the combination i-(a), ii-(b), iii-(c), iv-(d). This matching is factually incorrect regarding the 15th FC's weights. It incorrectly pairs Population with 10% and Forest & Ecology with 15%, whereas the actual weights were 15% and 10%, respectively. Crucially, this option assigns only 12.5% to Income Distance and 45% to Demographic Performance. Income Distance is the largest criterion at 45% because it directly addresses interstate fiscal inequality, while Demographic Performance received 12.5% to provide a necessary incentive without making it the dominant factor.

The incorrect option is 2:

Option 2 suggests the combination i-(a), ii-(b), iii-(d), iv-(c). While it correctly assigns 45% (d) to Income Distance and 12.5% (c) to Demographic Performance, the allocation of weights for Population and Forest & Ecology is incorrect. It pairs Population (i) with 10% (a) and Forest & Ecology (ii) with 15% (b). As established, the 15th FC assigned 15% weight to Population (2011) and 10% weight to Forest & Ecology. The primary reason for the increased weight for the 2011 Population data (15%) compared to the 14th FC's use of 1971 data (which got 17.5%) was to better reflect contemporary population sizes while simultaneously including Demographic Performance to mitigate concerns from states that successfully controlled their population growth.

The incorrect option is 4:

Option 4 suggests the combination i-(b), ii-(c), iii-(d), iv-(a). This option is incorrect because, while it correctly links Population (i) to 15% (b) and Income Distance (iii) to 45% (d), it misallocates the weights for the other two criteria. It incorrectly assigns 12.5% (c) to Forest & Ecology (ii), and 10% (a) to Demographic Performance (iv). In reality, the 15th FC allocated 10% to Forest & Ecology to incentivize states for maintaining forest cover and 12.5% to Demographic Performance to recognize efforts in family planning. The high 45% weight for Income Distance and the moderate 15% for Population remain the most significant components of the horizontal devolution formula.