Consider the following statements: 1. The 15th Finance Commission used fiscal effort as a criterion for horizontal devolution unlike the 14th Finance Commission 2. Both the 14th and the 15th Finance Commission used pre-2011 demographic variables as a criteria for horizontal devolution Which of the statements given above is/are correct?

Statement 1 is correct as the 15th Finance Commission (XVFC) introduced 'Tax and fiscal effort' with a 2.5% weight to reward states with higher tax collection efficiency [2]. The 14th Finance Commission (FFC) did not include a specific 'fiscal effort' criterion, focusing instead on fiscal discipline through other mechanisms . Statement 2 is incorrect because the XVFC exclusively used 2011 Census data for population-based devolution (15% weight) to reflect contemporary demographic realities [2][3]. In contrast, the FFC used both 1971 population (17.5%) and 2011 population (10%) data . While the XVFC introduced 'Demographic Performance' to reward states that controlled fertility rates, it did not use pre-2011 population figures as a base criterion for horizontal devolution, unlike its predecessor [2][3].

Sources

1. [2] https://www.pib.gov.in/PressReleasePage.aspx?PRID=1693868
2. [3] https://www.indiabudget.gov.in/budget2015-2016/es2014-15/echapvol1-10.pdf