With Reference to the Fourteenth Finance Commission, which of the following statements is/are correct? 1) It has increased the share of States in the central divisible pool from 32 percent to 42 percent.  2) It has made recommendations concerning sector-specific grants.  Select the correct answer using the codes given below.

The correct answer is A, that is, 1 only.

Statement 1 is correct. The Fourteenth Finance Commission (2015-20) raised the States' share in the central divisible pool of taxes from 32 per cent to 42 per cent, the largest devolution increase any Commission had recommended. The Thirteenth Finance Commission had set 32 per cent, so this was a major jump. The Fourteenth Commission also pushed for more untied funds for States.

Statement 2 is incorrect. The Commission's broad approach was to shrink the number and size of sector-specific grants and move States toward untied general-purpose transfers, so it did not expand the sector-specific grant architecture. Aspirants often read any mention of sector grants as a yes, but the direction of the recommendation matters.

Core concept: vertical and horizontal devolution, and the shift from tied to untied transfers. This links directly to Mains GS-II questions on Centre-State fiscal relations and cooperative federalism.

Trap: Students often mark both statements correct because the 14th FC is famous for devolution, while the sector-grant rationalisation is easy to forget.