Answer: (d) All five criteria
The Fifteenth Finance Commission used (d) All five criteria mentioned above (demographic performance, forest and ecology, governance reforms, stable government, and tax and fiscal efforts) for the horizontal tax devolution, in addition to population, area, and income distance.
Explanation:
The horizontal tax devolution refers to the distribution of taxes between the central government and the state governments in a country. In India, the Finance Commission is responsible for recommending the sharing of tax revenue between the central government and the state governments.
The Fifteenth Finance Commission of India, which was constituted for the period 2021-2026, adopted a holistic approach and utilized multiple criteria for the horizontal tax devolution. In addition to the traditional criteria of population, area, and income distance, the Commission also considered the following five criteria:
Demographic performance: This criterion evaluates the efforts made by states in controlling their population growth and achieving demographic balance.
Forest and ecology: It takes into account the efforts made by states in preserving and protecting their forests and ecological resources.
Governance reforms: This criterion considers the implementation of governance reforms and initiatives by states to improve efficiency and transparency in public administration.
Stable government: It evaluates the political stability and effectiveness of governance in states.
Tax and fiscal efforts: This criterion assesses the efforts made by states in revenue mobilization and fiscal management.
These additional criteria were utilized by the Fifteenth Finance Commission to ensure a more comprehensive and equitable distribution of tax revenue among the states based on their performance and needs.
Authenticative Reference Source:
The information provided above is based on the recommendations made by the Fifteenth Finance Commission. The official website of the Fifteenth Finance Commission (https://fifteenthfinance.gov.in/) is an authentic source to refer to for detailed information regarding the Commission's criteria for horizontal tax devolution. Additionally, the official website of the Ministry of Finance, Government of India (https://www.india.gov.in/), may also provide relevant information on this topic.
