The correct answer is Option 4. Explanation & Key Takeaways: • The suggestions of the 14^(th) FC include proposals such as: • Reorienting the determinants of individual states’ tax-share from fiscal discipline to per capita income and area; • Set-up of an autonomous, independent GST Compensation Fund through legislation as comfort provision to the states preceding a sweeping taxation reform; • Establishment of an independent fiscal council to undertake an ex-ante assessment of fiscal policy. • Modification or replacement of the current FRBM (Fiscal Responsibility and Budget Management) Act with a debt ceiling and fiscal responsibility legislation. Hence, option 4 is correct. • FRBM, Act: • It was enacted in August 2003. • It aims to make the Central government responsible for ensuring inter-generational equity in fiscal management and long-term macro-economic stability. • The Act envisages the setting of limits on the Central government’s debt and deficits. • It limited the fiscal deficit to 3% of the GDP. Related Concepts: • The Finance Commission is constituted by the President under article 280 of the Constitution, mainly to give its recommendations on the distribution of tax revenues between the Union and the States and amongst the States themselves. • Two distinctive features of the Commission’s work involve redressing the vertical imbalances between the taxation powers and expenditure responsibilities of the centre and the States respectively and equalization of all public services across the States. • Chairman of Fourteenth Finance Commission (2015-2020): Dr. Y. V. Reddy