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Question 36 of 60 · Constitutional & Statutory Bodies
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The Chairman of the Twelfth Finance Commission was:

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Answer: Option B — Dr. C. Rangarajan

Detailed Solution

  • Rangarajan. The Twelfth Finance Commission was set up in 2002 under the chairmanship of Dr. C. Rangarajan, and it covered the period from 2005 to 2010.

About Dr. C. Rangarajan:

  • He is a well-known economist.
  • He was Governor of the Reserve Bank of India from 1992 to 1997, during the early years of economic reforms.
  • He also served as Governor of Andhra Pradesh and as Chairman of the Prime Minister's Economic Advisory Council.
  • He chaired an expert group on the measurement of poverty.

Main recommendations of the Twelfth Finance Commission:

  • The share of states in the divisible pool of central taxes was fixed at 30.5 per cent.
  • It recommended a Debt Consolidation and Relief Facility for states, linked to fiscal reforms.
  • It asked states to pass Fiscal Responsibility and Budget Management laws to reduce deficits.
  • It recommended that the Centre should stop giving loans to states directly and that states should borrow from the market.
  • It gave grants for health, education, maintenance of roads and buildings, and heritage conservation.

Role of the Finance Commission:

  • It is set up by the President every five years.
  • It recommends how central taxes are shared between the Centre and the states, and among the states.
  • It recommends grants-in-aid to states that need assistance.

List of some Finance Commissions and their chairmen:

Tenth: K.C. Pant.

Eleventh: A.M. Khusro.

Twelfth: Dr. C. Rangarajan.

Thirteenth: Dr. Vijay Kelkar.

Importance of the Twelfth Finance Commission:

It encouraged fiscal discipline among states and helped many states reduce their debt burden.

Fiscal federalism:

Finance Commissions are central to fiscal federalism in India, because the Centre collects most taxes while states have large spending responsibilities.

Why not the other options?

Dr. Vijay Kelkar chaired the Thirteenth Finance Commission.

A.M. Khusro chaired the Eleventh.

K.C. Pant chaired the Tenth.

Quick tip

Remember: 10th FC = K.C. Pant; 11th = A.M. Khusro; 12th = C. Rangarajan; 13th = Vijay Kelkar.

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Constitutional & Statutory Bodies — Preparation

This question tests your understanding of Constitutional & Statutory Bodies, a key topic in the General Knowledge section. The detailed solution above uses a step-by-step approach to show the reasoning, and where available, a shortcut that helps you solve similar questions in under 90 seconds during the actual exam.

This topic covers bodies set up under the Constitution, such as the Election Commission, UPSC, Finance Commission, Comptroller and Auditor General and the national commissions for Scheduled Castes and Scheduled Tribes, and statutory or executive bodies such as NITI Aayog, the NHRC, the CVC, the CBI and Lokpal. Questions often ask whether a body is constitutional or not, which article creates it, who appoints its head and for how long. For example, the CAG is appointed under Article 148, the Finance Commission under Article 280, and NITI Aayog replaced the Planning Commission in 2015 by an executive resolution. Practise the constitutional and statutory bodies questions below, written in the style of the general awareness sections of exams such as SSC, banking, railways, CUET GAT, MAH CET and CLAT. Each question comes with a detailed explanation that adds related facts, so every question helps you revise more than one point.

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