The correct answer is (a) Zero%.
The Twelfth Finance Commission was set up in 2004 to recommend the devolution of central taxes and duties to the states for the period 2005-10. The Commission recommended that the revenue deficit of the Centre and States should be brought down to zero by the year 2009-10.
The Commission made this recommendation in order to improve the fiscal health of the Centre and States. A revenue deficit occurs when a government’s revenue receipts are less than its expenditure. This can lead to a build-up of debt, which can have a negative impact on economic growth.
The Commission’s recommendations were accepted by the government, and the Centre and States have taken steps to reduce their revenue deficits. However, the target of a zero revenue deficit by 2009-10 was not met.
The main reason for this was the global financial crisis of 2008-09. The crisis led to a sharp decline in tax revenues and an increase in expenditure, as governments took measures to stimulate the economy.
Despite not meeting the target of a zero revenue deficit, the Twelfth Finance Commission’s recommendations have had a positive impact on the fiscal health of the Centre and States. The revenue deficits of the Centre and States have been reduced significantly since the Commission’s report was submitted.
The Commission’s recommendations have also helped to improve the quality of public expenditure. The Commission emphasized the need for governments to invest in infrastructure, education, and health care. This has led to a more efficient use of public resources.
The Twelfth Finance Commission’s recommendations have been a significant step forward in improving the fiscal health of the Centre and States. The Commission’s recommendations have helped to reduce revenue deficits, improve the quality of public expenditure, and promote economic growth.