Centre–state resource transfer in India: What are the main channels? Identify the important mechanisms used to transfer financial resources from the Union government to the States.
General Knowledge
Indian Economy
Difficulty: Easy
Choose an option
-
AOnly statutory tax devolution
-
BOnly discretionary grants-in-aid
-
CTax devolution, grants-in-aid, and loans/plan assistance
-
DOnly centrally sponsored schemes
Answer
Correct Answer: Tax devolution, grants-in-aid, and loans/plan assistance
Explanation
Given mechanismsTransfers include: (i) tax devolution as recommended by Finance Commissions; (ii) grants-in-aid (statutory & discretionary); (iii) loans/plan assistance and transfers via centrally sponsored schemes.
Final AnswerTax devolution, grants-in-aid, and loans/plan assistance