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Indian EconomyHard

The Contingency Fund of India, placed at the disposal of the President for meeting unforeseen expenditure, is provided for by which article?

  1. A.Article 265
  2. B.Article 266
  3. C.Article 267
  4. D.Article 270

Correct answer

C. Article 267

Explanation

The correct answer is C, Article 267. Article 267 allows Parliament by law to establish a Contingency Fund of India, held at the disposal of the President so that advances can be made for unforeseen expenditure before Parliament authorises it; the amount is afterwards recouped from the Consolidated Fund through a supplementary appropriation. Option A is wrong because Article 265 lays down that no tax shall be levied or collected except by authority of law. Option B is wrong because Article 266 creates the Consolidated Fund of India and the Public Account, from the first of which no money may be drawn without parliamentary authority. Option D is wrong because Article 270 deals with taxes levied and collected by the Union and distributed between the Union and the States, which is the divisible pool the Finance Commission works on.

Read the full article: Public Finance and Finance Commission: Articles and Deficits

Practice Questions

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Q1.Indian EconomyEasy

Which article of the Constitution of India provides for the constitution of a Finance Commission?

  1. A.Article 112
  2. B.Article 266
  3. C.Article 280
  4. D.Article 324
Show answer
Correct answer: C. Article 280

Article 280 requires the President to constitute a Finance Commission at the expiration of every fifth year, or earlier if the President considers it necessary, consisting of a Chairman and four other members, and lists the matters on which it is to make recommendations.

Q2.Indian EconomyAsked in: SSC CGL · 20 Jul 2023, Shift 4Hard

Which of the following statements is/are correct regarding the Finance Commission of India? A. The Finance Commission consists of a Chairman and four other members. B. The recommendations made by the Finance Commission are binding on the government and the government needs to grant funds according to the advice of the Commission. C. Article 280 of the Indian Constitution talks about the recommendations of the Finance Commission.

  1. A.A and B only
  2. B.A, B and C
  3. C.A and C only
  4. D.B and C only
Show answer
Correct answer: C. A and C only

Statement A is correct: Article 280 provides that the Commission shall consist of a Chairman and four other members appointed by the President.

Q4.Indian EconomyMedium

Fiscal deficit of the Government of India is best defined as:

  1. A.Revenue expenditure minus revenue receipts
  2. B.Total expenditure minus total receipts other than borrowings
  3. C.Total expenditure minus interest payments
  4. D.Capital expenditure minus capital receipts
Show answer
Correct answer: B. Total expenditure minus total receipts other than borrowings

Fiscal deficit measures the whole amount the government must borrow in a year, because it compares everything it spends with everything it earns from taxes, non-tax revenue, recovery of loans and disinvestment, leaving borrowing out of the receipts side.

Q5.Indian EconomyAsked in: Uttar Pradesh · 22 Dec, 2018, Shift 1Medium

According to Article 243-I of the Constitution of India, a Finance Commission is constituted to review the financial position of the Panchayats:

  1. A.at the expiration of every sixth year
  2. B.at the expiration of every fifth year
  3. C.at the expiration of every second year
  4. D.at the expiration of every third year
Show answer
Correct answer: B. at the expiration of every fifth year

Article 243-I, inserted by the seventy-third Constitutional Amendment of 1992, requires the Governor of a State to constitute a Finance Commission at the expiration of every fifth year to review the financial position of the Panchayats and to recommend how taxes, duties, tolls and fees should be divided between the…