1. to allow the withdrawal of the money out of the Consolidated Fund of India
2. to allocate between the States the shares of proceeds of taxes
3. to consider applications for grants-in-aid from States
4. to supervise and report on whether the Union and State governments are levying taxes in accordance with the budgetary provisions
Which of these statements is/are correct?
Explanation
The Finance Commission of India primarily deals with the distribution of financial resources between the Union and the States.
Statement 1 is incorrect: The Finance Commission does not authorize withdrawals from the Consolidated Fund of India. This function falls under the purview of the Comptroller and Auditor General (CAG).
Statement 2 is correct: One of the key roles of the Finance Commission is to determine the distribution of tax revenues between the Union and the States, ensuring an equitable allocation of resources.
Statement 3 is correct: The Finance Commission considers applications for grants-in-aid from States. These grants help supplement the financial resources of states, particularly those in need.
Statement 4 is incorrect: The Commission does not supervise or report on tax compliance by the Union or State governments. Its primary focus is on reviewing financial relations and making recommendations on revenue sharing and grants.