Consider the following statements regarding the 14th Finance Commission 1 Finance Com...........

Indian Polity Centre - State Relations

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Consider the following statements regarding the 14th Finance Commission:

1) Finance Commission is a statutory body with the broad mandate to define centre state federal relations.

2) Its most important task is to recommend division of states’ revenues collected by the Centre of the

‘divisibility pool’ between the Centre and the states and the share to be allocated to each state.

3) It has used the criteria of fiscal discipline, fiscal capacity amongst others for deciding the horizontal devolution

Which of the above are incorrect?

1 only

2 only

3 only

All are correct

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Explanation:

1. Finance Commission of India is established by President of India as per Article 280 of the constitution. So it is a Constitutional body. First statement is incorrect.

2. Second statement is correct.

3. Third statement is also incorrect as, Relative to the Thirteenth Finance Commission, the 14th Finance commission has incorporated two new variables for horizontal distribution of Central taxes: 2011 population and forest cover; and excluded the fiscal discipline variable.