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With reference to a State Finance Commission, consider the following statements:
  1. It is constituted annually by the State government concerned, in consultation with the Governor of the State concerned.
  2. It examines the financial position of the local government bodies in the State concerned.
  3. It reviews the distribution of revenues between rural and urban local governments in the State concerned.
Which of the statements given above is/are correct?
  • a)
    1 and 2 only
  • b)
    3 only
  • c)
    2 and 3 only
  • d)
    1, 2 and 3
Correct answer is option 'C'. Can you explain this answer?
Most Upvoted Answer
With reference to a State Finance Commission, consider the following s...
State Finance Commission

The State Finance Commission (SFC) is a constitutional body that is established by the State government concerned. It is formed every five years or as the State government decides. The primary function of the SFC is to examine the financial position of the local government bodies in the State concerned.

Statements

Statement 1: It is constituted annually by the State government concerned, in consultation with the Governor of the State concerned.

This statement is incorrect. The SFC is not constituted annually but every five years or as the State government decides. The Governor does not have a role in the constitution of the SFC.

Statement 2: It examines the financial position of the local government bodies in the State concerned.

This statement is correct. The SFC is responsible for examining the financial position of the local government bodies in the State concerned. It reviews the financial resources available to them and their expenditure patterns.

Statement 3: It reviews the distribution of revenues between rural and urban local governments in the State concerned.

This statement is also correct. The SFC reviews the distribution of revenues between rural and urban local governments in the State concerned. It ensures that the distribution is equitable and takes into account the needs of both rural and urban areas.

Conclusion

In conclusion, statement 1 is incorrect, while statements 2 and 3 are correct. The SFC is an important institution that plays a crucial role in ensuring the financial health of local government bodies in the State concerned.
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Community Answer
With reference to a State Finance Commission, consider the following s...
The State government is required to appoint a State Finance Commission once every five years. So, statement 1 is not correct. This Commission would examine the financial position of the local government bodies in the State. It would also review the distribution of revenues between the State and local governments on the one hand and between rural and urban local governments on the other. This innovation ensures that allocating funds to the rural and urban local bodies will not be a political matter. So, statements 2 and 3 are correct. Therefore, the correct answer is c. 
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With reference to a State Finance Commission, consider the following statements: It is constituted annually by the State government concerned, in consultation with the Governor of the State concerned. It examines the financial position of the local government bodies in the State concerned. It reviews the distribution of revenues between rural and urban local governments in the State concerned.Which of the statements given above is/are correct?a)1 and 2 onlyb)3 onlyc)2 and 3 onlyd)1, 2 and 3Correct answer is option 'C'. Can you explain this answer?
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