Explanation:

• Statement 1 is correct: India’s public debt-to-GDP ratio is around 82%, which is high. However, it is considered sustainable due to the high growth rate of the economy and the fact that a significant portion of the debt is held in local currency, which reduces exposure to exchange rate fluctuations.

• Statement 2 is incorrect: The states together hold about one-third of the total public debt. While they do face increasing debt levels, they do not face immediate debt sustainability issues due to implicit guarantees from the central government and the fact that their debt is not in foreign currency or floating rates.

• Statement 3 is incorrect: It is not the current mandate of the Finance Commission.

Hence option 1st is correct.