Q. Consider the following statements:

1. Finance Commission is a Constitutional body, while the Planning Commission is a non-statutory institution
2. The scope of the Finance Commission is limited to a review of the revenue segment of the budget, whereas the Planning Commission undertakes an overall review encompassing both capital and revenue requirements of the States

Which of the above statements is / are correct?
Answer: Both 1 and 2
Notes: The Planning Commission in India, which is neither a constitutional nor a statutory body, is alleged to have taken over the role of the Finance Commission. The Planning Commission has limited the Finance Commission's involvement to recommending grants to states on revenue account only under Article 275 of the Indian Constitution. The Finance Commission evaluates the non-plan requirements of the State Governments and recommends a share in the net yield from Central and Grants-in-aid. The divisible portion of Central taxes is distributed among the states based on independent criteria.

This question is part of UPSC Daily 20 MCQ Series Course on GKToday Android app.