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 percent to 42 percent. 2. It has made recommendations concerning sector-specific grants. Select the correct answer using the code given below.
- A1 onlyCorrect
- B2 only
- CBoth 1 and 2
- DNeither 1 nor 2
Explanation
The Fourteenth Finance Commission (FFC), chaired by Dr. Y. V. Reddy, submitted its report in December 2014, covering the period 2015-2020. Statement 1 is correct: A significant recommendation of the FFC was to increase the share of States in the net proceeds of Union taxes from 32 percent to 42 percent, which was the largest ever increase. This was a major step towards enhancing fiscal federalism. Statement 2 is incorrect: The FFC consciously moved away from providing sector-specific grants. Instead, it recommended larger untied transfers to States, giving them greater flexibility in designing and implementing their own development programs. This approach aimed to enhance the autonomy and accountability of the States.
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