The correct answer is D. None of the statements a, b and c given above is correct in this context.
The Finance Commission of India is not directly responsible for
A. Encouraging foreign capital inflow (This is more related to government policies and initiatives)
B. Distribution of finances among Public Sector Undertakings (This is typically handled by the Ministry of Finance or relevant administrative ministries)
C. Ensuring transparency in financial administration (While transparency is important in its work, the Finance Commission's primary focus is on resource allocation)
The Finance Commission's main function is to recommend the distribution of tax revenue and other financial resources between the central government and the state governments, and also among the states themselves. It plays a crucial role in India's federal fiscal system.