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Centre–state resource transfer in India: What are the main channels? Identify the important mechanisms used to transfer financial resources from the Union government to the States.

Difficulty: Easy

Only statutory tax devolution
Only discretionary grants-in-aid
Tax devolution, grants-in-aid, and loans/plan assistance
Only centrally sponsored schemes

Correct Answer: Tax devolution, grants-in-aid, and loans/plan assistance

Explanation:

Given mechanisms
Transfers include: (i) tax devolution as recommended by Finance Commissions; (ii) grants-in-aid (statutory & discretionary); (iii) loans/plan assistance and transfers via centrally sponsored schemes.

Final Answer
Tax devolution, grants-in-aid, and loans/plan assistance

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