The 14th Finance Commission has recommended for the creation of a “Consolidated Sinking Fund”. Which among the following is the objective of such fund?

Answer: [D] amortisation of debt of the Union and State governments

The proposal to establish such fund had first come from 10th Finance Commission, which said that such funds should be established as a part of fiscal discipline and that the constitution of Consolidated Sinking Fund (CSF) for the amortisation of debt was relevant both for States and the Union. The logic of constituting a CSF for States was to enable them to tide over the roll-over risks due to their weak cash management practices and also State Development Loans being under-subscribed.

14th Finance Commission has reiterated this proposal.

This question is a part of GKToday's Integrated IAS General Studies Module