Which of the following statements regarding Vertical Fiscal Imbalance (VFI) in Indian fiscal federalism is incorrect?
1. Vertical Fiscal Imbalance refers to the mismatch between the revenue-raising powers of the Union and the expenditure responsibilities of the States.
2. The Finance Commission primarily addresses VFI by recommending tax devolution to the States, with grants under Article 275 being secondary.
Select the answer using the code given below:
1
Only 1
2
Only 2
3
Both 1 and 2
4
Neither 1 nor 2