The 15th Finance Commission has recommended that the vertical share of the states be kept at -

Correct option is A

The correct answer is (a) 41% from 2021-22 to 2025-26.
Explanation:
· The 15th Finance Commission recommended that the vertical share of the states in the divisible pool of central taxes should be kept at 41% for the period from 2021-22 to 2025-26.
· This recommendation was made considering the need to balance the fiscal autonomy of states with the fiscal needs of the central government.
Important Key Points:
· The Finance Commission is a constitutional body that determines the distribution of financial resources between the center and the states.
· The vertical share refers to the proportion of the central taxes that are allocated to the states, which is crucial for state governments to fund their expenditure on development and welfare programs.
· The 15th Finance Commission's recommendation of 41% is slightly lower than the 42% recommended by the 14th Finance Commission, primarily due to the reorganization of Jammu and Kashmir, which became a Union Territory with a legislature.
· The Commission also made recommendations on horizontal distribution, which refers to how the allocated resources are divided among the states based on criteria such as population, income distance, and fiscal performance.
· The implementation of the Finance Commission's recommendations plays a significant role in shaping fiscal federalism in India, ensuring that both the center and the states have the necessary resources to meet their obligations.
· The 15th Finance Commission also took into account the impact of the COVID-19 pandemic on the economy while making its recommendations.
Knowledge Booster:
· 42% (14th Finance Commission): This was the share recommended by the previous Finance Commission for the period from 2015-16 to 2019-20.
· 40% (Hypothetical): Not an actual recommendation but could be a figure considered based on different fiscal scenarios.
· 43% (Not Recommended): No Finance Commission has recommended this percentage for the vertical share of states.