Official Answer Key & Detailed Solution
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Correct Answer: Option (A) — 1 only
Concept & Option Breakdown
Standard Reference VerifiedStatement 1 is correct: The Fourteenth Finance Commission (headed by Dr. Y. V. Reddy) recommended a historic enhancement in the states' share of the net divisible tax pool from 32% to 42%.
Statement 2 is incorrect: The Fourteenth Finance Commission departed from the practice of past commissions by not recommending sector-specific grants, choosing instead to give states greater fiscal autonomy through untied tax devolution and standard revenue deficit grants.
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