Indian Polity · Polity
Consider the following statements regarding federal dynamics and the constitutional framework of fiscal federalism in India: Statement I: India's federal structure constitutionally mandates cooperative functioning between the Union and the States in fiscal matters, even though residuary power of taxation vests with the Union. Statement II: The Finance Commission's recommendations on tax devolution and grants-in-aid are legally binding on the Union Government, leaving no scope for discretionary fiscal transfers to States. Statement III: Centrally Sponsored Schemes (CSS) constitutionally limit the legislative competence of States by transferring subjects from the State List to the Union List. Which one of the following is correct in respect of the above statements?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Neither Statement II nor Statement III is correct.✓
- 2Only one of the Statements II and III is correct, and that explains Statement I.
- 3Both Statement II and Statement III are correct, but only one of them explains Statement I.
- 4Both Statement II and Statement III are correct, and both of them explain Statement I.
Correct answer
Neither Statement II nor Statement III is correct.
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