The correct answer is option 3: resources transferred from the Government of India to States are termed `statutory` if they are made on the recommendations of the Finance Commission.

The Finance Commission is a constitutional body in India that is responsible for recommending the distribution of financial resources between the central government and the state governments. It is constituted every five years and its recommendations are binding on the government.

The Finance Commission takes into account various factors like population, income levels, infrastructure needs, and fiscal capacity of the states when making its recommendations. These recommendations determine the amount of financial resources that will be transferred from the central government to the states in the form of grants.

Therefore, resources transferred from the Government of India to states on the recommendations of the Finance Commission are termed `statutory` as they are mandated by law.