Actual Article
Article 292: Borrowing by the Government of India
The executive power of the Union extends to the borrowing upon the security of the Consolidated Fund of India within such limits, if any, as may from time to time be fixed by Parliament by law and to the giving of guarantees within such limits, if any, as may be so fixed.
UPSC Notes for Article 292
Explanation:
- Union’s Borrowing Power: Article 292 grants the Union Government the power to borrow money upon the security of the Consolidated Fund of India.
- Parliamentary Limits: The borrowing must be within the limits set by Parliament, ensuring legislative oversight and control over the Union’s financial liabilities.
- Giving of Guarantees: The Union Government is also authorized to provide guarantees within the limits specified by Parliament, adding an extra layer of financial security for certain transactions or loans.
Key Points:
- Fiscal Responsibility: The article ensures that the Union Government’s borrowing is regulated and kept within manageable limits, promoting fiscal responsibility.
- Parliamentary Control: By requiring Parliament to set borrowing limits, the article ensures transparency and accountability in the management of the Union’s finances.
- Financial Guarantees: The provision to give guarantees helps the government support critical projects or loans, potentially reducing the cost of borrowing for important initiatives.
Important Cases and Commissions Related to Article 292
Cases:
- No specific landmark cases directly interpreting Article 292, as it primarily deals with procedural aspects of government borrowing.
Commissions:
- Finance Commission: Reviews and recommends measures related to the financial management of the Union, including borrowing practices.
- Fiscal Responsibility and Budget Management (FRBM) Review Committee: Assesses the fiscal discipline and borrowing practices of the government, providing recommendations for sustainable financial management.
Important Reports Related to Article 292:
- Finance Commission Reports: Analyze the Union’s borrowing practices and provide recommendations to ensure fiscal discipline and sustainability.
- FRBM Review Committee Reports: Evaluate the effectiveness of the Fiscal Responsibility and Budget Management Act, which aims to regulate government borrowing and ensure fiscal stability.
Previous Year Prelims Questions Related to Article 292
- (UPSC Prelims 2016) What does Article 292 of the Indian Constitution pertain to?
- A. Taxation of income
- B. Borrowing by the Government of India
- C. Financial emergency provisions
- D. Distribution of revenues between the Union and States Correct Answer: B. Borrowing by the Government of India
- (UPSC Prelims 2018) Who sets the limits on borrowing by the Government of India according to Article 292?
- A. The President
- B. The Prime Minister
- C. The Parliament
- D. The Reserve Bank of India Correct Answer: C. The Parliament
Previous Year Mains Questions Related to Article 292
- Mains 2016: “Discuss the significance of Article 292 in ensuring fiscal responsibility in the Union Government’s financial management. How does parliamentary control over borrowing limits contribute to transparency and accountability?”
- Mains 2019: “Evaluate the role of Article 292 in the context of India’s fiscal policy. What are the potential benefits and challenges associated with the Union Government’s borrowing powers under this article?”
Additional Insights:
- Maintaining Fiscal Health: Article 292 is crucial for maintaining the fiscal health of the nation by regulating government borrowing and ensuring that it remains within sustainable limits.
- Supporting Economic Growth: The ability to borrow and provide guarantees allows the government to finance critical infrastructure projects and other initiatives that can spur economic growth.
- Legislative Oversight: Parliamentary control over borrowing limits ensures that there is democratic oversight and accountability in the financial decisions of the Union Government.
Understanding Article 292 is crucial for UPSC aspirants as it provides insights into the mechanisms for regulating the Union Government’s borrowing, emphasizing the importance of fiscal responsibility and parliamentary oversight. This knowledge is essential for both preliminary and main examinations, offering a comprehensive understanding of the financial provisions and their impact on governance within the Indian Constitution.