What is the percentage weightage assigned to Forest and Ecology in the devolution formula given by the Fifteenth Finance Commission of India for sharing of Union tax revenue with the States?

Q: What is the answer to CAPF 2024 Paper I Q100?

A. Correct — A, 10%. Forest and ecology carries a weight of 10 per cent in the Fifteenth Finance Commission's formula for sharing Union tax revenue among the States. The criterion is measured by each State's share in the total dense forest cover of all States, and it exists to compensate States for the opportunity cost of keeping land under forest rather than putting it to commercial use. The Fourteenth Commission had introduced the idea at a weight of 7.5 per cent under the name forest cover; the Fifteenth renamed it, widened it to forest and ecology and raised the weight. (Provisional — pending the official UPSC key.)

(a)10%
(b)15%
(c)7.5%
(d)2.5%

Answer

Why

Correct — A, 10%. Forest and ecology carries a weight of 10 per cent in the Fifteenth Finance Commission's formula for sharing Union tax revenue among the States. The criterion is measured by each State's share in the total dense forest cover of all States, and it exists to compensate States for the opportunity cost of keeping land under forest rather than putting it to commercial use. The Fourteenth Commission had introduced the idea at a weight of 7.5 per cent under the name forest cover; the Fifteenth renamed it, widened it to forest and ecology and raised the weight.

Why the others are wrong

(b)15% — Fifteen per cent is the weight the Fifteenth Commission gave to area, and also the weight it gave to the 2011 population. Neither of those is the forest criterion.
(c)7.5% — That was the weight of forest cover in the Fourteenth Commission's formula, which is exactly the figure the Fifteenth Commission raised.
(d)2.5% — Two and a half per cent is the weight for tax and fiscal efforts, the smallest criterion in the Fifteenth Commission's formula.

Concept

Every weight in the horizontal devolution formula is an argument about fairness. Income distance, at 45 per cent, redistributes towards poorer States. Area and population measure need. Demographic performance, at 12.5 per cent, rewards States that lowered fertility. Forest and ecology, at 10 per cent, treats forest cover as a service a State renders to the country at a cost to itself. Tax and fiscal efforts, at 2.5 per cent, rewards States that collect their own revenue well.

Every option in this item is a real weight from the same family of formulas, which is what makes guessing expensive. The reliable way to hold them is as one list that sums to a hundred — 45 plus 15 plus 15 plus 12.5 plus 10 plus 2.5 — because a candidate who remembers five of the six can recover the sixth. It is also worth carrying the direction of change from the previous Commission: forest went up from 7.5 to 10, income distance came down from 50 to 45, and the population base moved from 1971 to 2011.

Key facts

Forest and ecology carries 10 per cent weight in the Fifteenth Finance Commission's devolution formula.
The full set of weights is income distance 45, area 15, population 2011 15, demographic performance 12.5, forest and ecology 10, tax and fiscal efforts 2.5.
The Fourteenth Commission used forest cover at 7.5 per cent weight.
The criterion is based on a State's share in the total dense forest cover of all States.
The Fifteenth Commission recommended 41 per cent of the divisible pool for the States.

The six weights, and what each is for

Income distance — 45→Redistribution towards States with lower per capita income

Area — 15→Cost of administering a larger territory

Population, 2011 — 15→Need, on the census the terms of reference specified

Demographic performance — 12.5→Reward for lower fertility, scaled by 1971 population

Forest and ecology — 10→Compensation for keeping land under forest

Tax and fiscal efforts — 2.5→Reward for a State's own revenue effort

The six weights sum to a hundred, so remembering five recovers the sixth.

Study next

Ecological fiscal transfers and India's place in that literatureThe India State of Forest Report and how forest cover is measuredIncome distance and its dominance of the devolution formulaGrants-in-aid under Article 275 and revenue deficit grantsThe Sixteenth Finance Commission and the criteria under discussion

Common traps

Quoting the Fourteenth Commission's 7.5 per cent for a question about the Fifteenth.
Confusing the forest weight with the area weight, which is 15 per cent.
Assuming the criterion uses total forest cover; it uses each State's share of dense forest cover.

A single-number recall where all four options are genuine weights from the same or the preceding formula.

Related PYQs

UPSC_2023_GS1_Q292023Open & attempt →

Consider the following: 1. Demographic performance 2. Forest and ecology 3. Governance reforms 4. Stable government 5. Tax and fiscal efforts For the horizontal tax devolution, the Fifteenth Finance Commission used how many of the above as criteria other than population area and income distance?

(a) Only two
(b) Only three
(c) Only four
(d) All five

Answer(b) Only three

The same devolution formula, counted instead of weighted. Demographic performance, forest and ecology, and tax and fiscal efforts are the three criteria the Fifteenth Commission added beyond population, area and income distance.

Practice

practice — not a real PYQ
Which criterion in the Fifteenth Finance Commission's devolution formula carries the smallest weight?
- (a)Forest and ecology
- (b)Demographic performance
- (c)Tax and fiscal efforts
- (d)Area
Answer(c) Tax and fiscal efforts — 2.5 per cent, against 10 for forest and ecology and 15 for area.
practice — not a real PYQ
The Fifteenth Finance Commission recommended that the States' share in the divisible pool of Union taxes be
- (a)32 per cent
- (b)38 per cent
- (c)41 per cent
- (d)42 per cent
Answer(c) 41 per cent — one percentage point below the Fourteenth Commission's 42, after Jammu and Kashmir became a Union territory.