Economics · Fiscal Federalism and Local Bodies
With reference to Finance Commission grants to Urban Local Bodies (ULBs) in India, consider the following statements: Statement I: The Constitution provides for Finance Commissions to recommend measures to augment the Consolidated Fund of a State to supplement the resources of municipalities. Statement II: A significant portion of Finance Commission grants to cities are 'tied grants', which must be used for specific sectors such as water supply, sanitation, and wastewater management. Statement III: Finance Commission grants to Urban Local Bodies constitute a substantial share of India’s GDP and form the primary source of revenue for municipal governments. Which of the following is correct?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Statement I and Statement II are correct, but Statement III is incorrect.✓
- 2Statement II and Statement III are correct.
- 3Both Statement I and Statement II are correct.
- 4Only Statement I is correct.
Correct answer
Statement I and Statement II are correct, but Statement III is incorrect.
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