The 14th Finance Commission has given a 7.5% weight to forest cover in the formula to determine how much different states will get from tax devolution. What benefits the huge forest covers provide to states’ economy?
1. It serves as Carbon sink
2. It removes fiscal disability of the states
3. It provides ecological benefits
Select the correct option from the codes given below:

Answer: [C] Only 1 & 3

Second statement needs your thinking.

From Finance Commission Report:

Large forest cover provides huge ecological benefits, but there is also an opportunity cost in terms of area not available for other economic activities and this also serves as an important indicator of fiscal disability.

This question is a part of GKToday's Integrated IAS General Studies Module