Question

A key measure recommended by an SFC to ensure the predictability of financial transfers to local bodies is to:

• A. Increase the number of untied grants provided to local bodies.
• B. Introduce performance-based grants that are not linked to state revenue.
• C. Make the distribution of funds dependent on the political affiliation of local body members.
• D. Tie grants to a fixed percentage of the state's total revenue.

Answer 1

Answer:

D. Tie grants to a fixed percentage of the state's total revenue.

• By recommending a clear and formulaic devolution of funds, often as a fixed percentage of the state's tax revenue, the SFC ensures that local bodies have a predictable and stable stream of income, which is crucial for effective planning and budgeting.