Solution

The Constitution provides for grants-in-aid to the states from the Central resources besides tax sharing between centre and state. There are two types of grants-in-aid i.e., statutory grants and discretionary grants. ● Statement 1 is incorrect: Discretionary Grant: According to article 282 both Centre and the states can provide grants for any public purpose, even if it is not within their respective legislative competence. Under this provision, the Centre provides grants to the states. The Centre government is under no obligation to give these grants and the matter lies within its discretion. ● Statement 2 is correct and Statement 3 is incorrect: Statutory grant: According to Article 275 Parliament can give grants to states which are in need of financial assistance not to every state. It is also possible that different sums are given to different states. These sums are charged on consolidated funds of India. The statutory grants are given to the states on the recommendation of the Finance Commission.