With Reference to the Fourteenth Finance Commission, which of the following statements is/are correct? 1. It has increased the share of States in the central divisible pool from 32 per cent to 42 per cent 2. It has made recommendations concerning sector-specific grants
Explanation
Statement 1 is Correct: The 14th Finance Commission, chaired by Dr. Y.V. Reddy, recommended a significant increase in the devolution of taxes from the Union to the States, raising the share in the central divisible pool from 32% to 42%.
Statement 2 is Incorrect: The commission moved away from the practice of recommending sector-specific grants. It argued that such tied grants restrict the fiscal autonomy of states. Instead, it focused on enhancing unconditional formula-based devolution to allow states the flexibility to spend according to their own priorities, providing grants only for local bodies and disaster management.