Q. Which of the following is/are correct regarding Centre-State financial status?
1.The Constitution grants the Union government more revenue-raising powers than state governments.
2.Both the Centre and state’s share of gross tax revenue is reducing in the present year.
3.Implementation of the Ujwal DISCOM Assurance Yojana is one of the reasons for poor financial health of States.
Select the correct answer using the codes given below;

[A] 1 only

[B] 2 and 3 only

[C] .1 and 3 only

[D] 1, 2 and 3

Answer: C
Notes:

Statement 1 is correct: The Constitution grants the Union government more revenue-raising powers while the States are tasked to undertake most of the development and welfare-related responsibilities.

Statement 2 is incorrect: The Union government’s share of gross tax revenue continued to rise while the state government share of gross tax revenue decreased.

Statement 3 is correct: The reason for poor financial health of States’ are,  a) Slowdown in growth in 2019-20, b) Implementation of the Ujwal DISCOM Assurance Yojana, c) Providing farm loan waivers, d) Heightened health and other expenses during the pandemic, and e) Revenue shortfall: Due to the reduction in gross tax revenues of states during the pandemic and the States’ share of the Union government’s taxes recorded a steep fall of 15% and 9% in FY20 and FY21, respectively.

Source: The Hindu