Solved previous year question from the OPSC OAS/OCS 2021 Preliminary Examination (General Studies), with the official answer key and a detailed explanation.
Question
Consider the following statements in respect of Panchayati Raj Institutions in India:
(i) Every Panchayati has right to receive grant-in-aid from the State Fund on the recommendation made by NITI Aayog.
(ii) The assigned / shared revenues are one which is collected by State Government but shared/transferred to local bodies.
(iii) State Finance Commission recommends transfer of financial resources from Centre to the States.
(iv) The State Finance. Commission created under Article 243 (1) reviews the financial position of Panchayats and Municipalities.
Which of the above statement/s is/are correct?
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Answer & Explanation
Correct answer: (A) (ii) and (iv)
(i)Every Panchayat has the right to receive a grant-in-aid from the State Fund-incorrect.
- Every Panchayat has the right to receive grant-in-aid from the Consolidated Fund of the State, but the recommendation is made by the State Finance Commission, not NITI Aayog.NITI Aayog has no direct role in recommending grants to Panchayats.
(ii)The assigned / shared revenues are one which is collected by State Government but shared/transferred to local bodies-correct
- Assigned or shared revenues are indeed those taxes and revenues that are collected by the State Government but shared with or transferred to local bodies (Panchayats and Municipalities). This is one of the key sources of revenue for Panchayati Raj Institutions, alongside their own tax revenues and grants-in-aid. The State Finance Commission recommends the principles for such sharing.
(iii)State Finance Commission recommends transfer of financial resources from Centre to the States-incorrect.
- The Finance Commission under Article 280 is entrusted with the task of vertical and horizontal devolution of funds. It divides funds between Centre and State.The State Finance Commission deals exclusively with the distribution of financial resources between the State Government and local bodies (Panchayats and Municipalities).
(iv)The State Finance Commission created under Article 243 (I) reviews the financial position of Panchayats and Municipalities- Correct
- Article 243-I of the Indian Constitution prescribes that the Governor of a State shall, as soon as may be within one year from the commencement of the Constitution (Seventy-third Amendment) Act, 1992, and thereafter at the expiration of every fifth year, constitute a Finance Commission to review the financial position of the Panchayats and to make recommendations to the Governor.
