Finance Commission

The Thirteenth Finance Commission was tasked with making recommendations on the distribution of tax revenues between the Union and the States for the five years from 2010 to 2015. **Statement 1 is correct:** The Thirteenth Finance Commission did make recommendations regarding the design and implementation of the Goods and Services Tax (GST) and suggested a compensation package for states to offset potential revenue losses from the transition to the GST system. **Statement 2 is incorrect:** The Finance Commission is not responsible for job creation. Its mandate is to define the financial relations between the central government and the individual state governments. **Statement 3 is correct:** One of the key functions of the Finance Commission is to recommend the principles governing the grants-in-aid to the states out of the Consolidated Fund of India. The Thirteenth Finance Commission also made recommendations for the devolution of a specified share of central taxes to local bodies. Therefore, 1 and 3 are correct statements.

**Statement 1 is Correct:** The Fourteenth Finance Commission indeed increased the devolution of tax revenue from the central government to the states. **Statement 2 is Incorrect:** While promoting formula-based devolution, the commission does not provide recommendations regarding sector-specific grants to ensure focus on critical areas.