Which among the following is not correct?

The Seventh Schedule of the Indian Constitution provides a three-fold distribution of legislative subjects [1]. Option 3 is incorrect because 'Inter-State trade and commerce' is explicitly enumerated as Entry 42 in the Union List (List I), not the State List [1]. Consequently, the Parliament has exclusive power to legislate on this matter [1]. Regarding the other options: Legislation on criminal law (Entry 1) is in the Concurrent List, excluding matters like the use of naval, military, or air forces. Bankruptcy and Insolvency are listed under Entry 9 of the Concurrent List (List III), allowing both Union and State governments to legislate [2]. Banking is exclusively a Union subject under Entry 45 of the Union List [1]. Therefore, the statement claiming inter-state trade belongs to the State List is the only incorrect one.

Sources

1. [1] Indian Polity, M. Laxmikanth(7th ed.) > Chapter 15: Centre-State Relations > II Distribution of Legislative Subjects > p. 145
2. [2] Laxmikanth, M. Indian Polity. 7th ed., McGraw Hill. > Chapter 15: Centre State Relations > II Distribution of Legislative Subjects > p. 145