| Consider the following statements: |
| The Finance Commission of India differs from the Planning Commission because |
| 1. The former is a Constitutional body and latter a Cabinet creation |
| 2. The former determines the principles of allocation of grants-in-aid to the States and the latter allocates funds for the Central and the State Governments |
| 3. The former emphasizes the distinction between Plan and Non-Plan expenditure and the latter maintains it |
| 4. The former's report is submitted to the Union finance Minister and the latter's to the Cabinet. Which of these are correct? |
A) 1 and 2
B) 3 and 4
C) 2, 3 and 4
D) 1, 2, 3 and 4
Correct Answer: A
Solution :
[a] Finance Commission is a Constitutional body whereas the Planning Commission is a non-statutory institution. The Commission is constituted to make the commendations to the president about the distribution of the net proceeds of taxes between the Union and States and also the allocation of the same amongst the States themselves. It is also under the ambit of the Finance commission to define the financial relations between the union and the States. They also deal with devolution of non-plan revenue resources.
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