With reference to the Finance Commission consider the following statements 1 Its recommendations are...........

Indian Polity Others

With reference to the Finance Commission, consider the following statements.

1) Its recommendations are binding with regard to the principles that govern the grant- in-aid to the states by the Centre out of the consolidated fund of India.

2) It submits its report to the president who lays it before both the Houses of Parliament along with an explanatory memorandum on the actions taken on its recommendations.

Which of the above is/are correct?

1 only

2 only

Both 1 and 2

None

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Explanation:

The Finance Commission is required to make recommendations to the president of India on the following matters:

The distribution of the net proceeds of taxes to be shared between the Centre and the states, and the allocation between the states of the respective shares of such proceeds.
The principles that should govern the grants-in-aid to the states by the Centre (i.e., out of the consolidated fund of India).

The measures needed to augment the consolidated fund of a state. However, these recommendations are not binding on the government.