With reference to Finance commission, consider the following statements:

1. It is constituted by the Parliament of India every fifth year or at such earlier time as it considers necessary.

2. It consists of a chairman and four other members to be appointed by the president.

3. The Constitution authorizes the Parliament to determine the qualifications of members of the commission and the manner in which they should be selected.

4. It also makes a recommendation to augment the consolidated fund of a state to supplement the resources of the panchayats and the municipalities in the state on the basis of the recommendations made by the state finance commission.

select the correct answer using the code given below: