Correct Option (A)
Finance Commission
Article 280 of the Indian Constitution mandates the establishment of a Finance Commission. This constitutional body is primarily responsible for recommending the distribution of net proceeds of taxes between the Union and the States, and for laying down the principles governing the grants-in-aid of the revenues to the states out of the Consolidated Fund of India. It also addresses other matters referred to it by the President in the interest of sound finance.
Incorrect Options
Option (B): Inter-State Council
The Inter-State Council is established under Article 263 of the Constitution to inquire into and advise upon disputes between states, investigate subjects in which some or all of the states, or the Union and one or more of the states, have a common interest, and make recommendations upon any such subject for the better coordination of policy and action. It does not deal with the principles governing financial grants.
Option (C): Union Ministry of Finance
The Union Ministry of Finance is responsible for the overall financial administration and economic policy of the country, including the preparation of the Union Budget and management of public finances. While it implements financial policies, it does not recommend the principles for grants-in-aid to states; this function is constitutionally assigned to the Finance Commission.
Option (D): Public Accounts Committee
The Public Accounts Committee (PAC) is a parliamentary committee that examines the annual audit reports of the Comptroller and Auditor General of India (CAG). Its primary function is to scrutinize government expenditure after it has been incurred, ensuring financial accountability and adherence to parliamentary sanctions. It is not involved in recommending the principles for grants-in-aid.