Resources transferred from the Government of India to States are termed ‘statutory’ if they are made

Question: Resources transferred from the Government of India to States are termed ‘statutory’ if they are
made
(1) in the form of loans
(2) on the recommendations of the Planning Commission
(3) on the recommendations of the Finance Commission
(4) in the form of grants

Answer: (3) on the recommendations of the Finance Commission
In an explicit recognition of vertical and horizontal imbalances, the Indian Constitution embodies enabling and mandatory provisions to address them through the transfer of resources from the Centre to the States. Statutory grants-in-aid of the revenues of States are dealt in Article 275 of the Constitution. It is done on the basis of recommendation of the Finance Commission of India. Such grants are given to bring uniform level of economic prosperity among different states. They have to bring about uniform income and services and economic integration among the states.

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