With reference to the Fourteenth Finance Commission, which of the following statements is/are correct? 1. It has increased the share of States in the central divisible pool from 32 percent to 42 percent. 2. It has made recommendations concerning sector-specific grants. Select the correct answer using the code given below.

1. The Fourteenth Finance Commission (headed by Dr. Y. V. Reddy) made a significant recommendation to increase the vertical devolution, i.e., the share of States in the net proceeds of the central divisible pool of taxes, from the existing 32 percent (as per the 13th Finance Commission) to 42 percent. This recommendation was accepted by the Union Government. Hence, Statement 1 is correct. 2. A major departure made by the Fourteenth Finance Commission was that it moved away from the practice of recommending sector-specific grants. It advocated for greater untied fund transfers to the states through higher tax devolution, thereby providing them more fiscal autonomy. It recommended grants for local bodies and revenue deficit grants but largely discontinued the sector-specific grants approach of previous commissions. Hence, Statement 2 is incorrect.