Actual Article
Article 293: Borrowing by States
- Subject to the provisions of this article, the executive power of a State extends to borrowing upon the security of the Consolidated Fund of the State within such limits, if any, as may from time to time be fixed by the Legislature of such State by law and to the giving of guarantees within such limits, if any, as may be so fixed.
- The Government of India may, subject to such conditions as may be laid down by or under any law made by Parliament, make loans to any State or, so long as any limits fixed under article 292 are not exceeded, give guarantees in respect of loans raised by any State, and any sums required for the purpose of making such loans shall be charged on the Consolidated Fund of India.
- A State may not without the consent of the Government of India raise any loan if there is still outstanding any part of a loan which has been made to the State by the Government of India or in respect of which a guarantee has been given by the Government of India.
- A consent under clause (3) may be granted subject to such conditions, if any, as the Government of India may think fit to impose.
UPSC Notes for Article 293
Explanation:
- State Borrowing Power: Clause (1) grants States the power to borrow money upon the security of their Consolidated Fund within the limits set by their respective Legislatures. States can also provide guarantees within these limits.
- Union Loans and Guarantees: Clause (2) allows the Government of India to make loans to States or give guarantees for State loans, within the borrowing limits set by Article 292.
- Consent for Borrowing: Clause (3) requires States to obtain the consent of the Government of India before raising any new loans if they have outstanding loans from the Union or guaranteed by the Union.
- Conditions on Consent: Clause (4) allows the Government of India to impose conditions on the consent granted for State borrowing.
Key Points:
- State Autonomy: Article 293 provides States with the autonomy to manage their finances through borrowing, within the limits set by their Legislatures.
- Union Oversight: The requirement for Union consent and the ability to impose conditions ensure that State borrowing does not adversely affect the overall financial stability of the country.
- Financial Discipline: The article promotes financial discipline among States by regulating their borrowing practices and ensuring accountability.
Important Cases and Commissions Related to Article 293
Cases:
- No specific landmark cases directly interpreting Article 293, as it primarily deals with procedural financial management.
Commissions:
- Finance Commission: Reviews and recommends measures regarding the borrowing practices of States, ensuring compliance with Article 293.
- N.K. Singh Commission (Fifteenth Finance Commission): Provided detailed recommendations on managing State debts and loans, considering the principles of Article 293.
Important Reports Related to Article 293:
- Finance Commission Reports: Analyze State borrowing practices and provide recommendations to ensure fiscal discipline and sustainability.
- Reports on Fiscal Responsibility and Budget Management (FRBM) Act: Discuss the regulation of State borrowings and debt management practices, ensuring compliance with the principles of Article 293.
Previous Year Prelims Questions Related to Article 293
- (UPSC Prelims 2016) What does Article 293 of the Indian Constitution regulate?
- A. Taxation policies of the States
- B. Borrowing by the States
- C. Distribution of revenues between the Union and States
- D. Financial emergency provisions Correct Answer: B. Borrowing by the States
- (UPSC Prelims 2018) Under Article 293, what is required for a State to raise new loans if it has outstanding loans from the Government of India?
- A. Approval from the Supreme Court
- B. Consent of the Government of India
- C. Consent of the President
- D. Approval from the State Legislature Correct Answer: B. Consent of the Government of India
Previous Year Mains Questions Related to Article 293
- Mains 2016: “Discuss the significance of Article 293 in regulating State borrowing practices. How does this article ensure financial discipline and accountability among States?”
- Mains 2019: “Evaluate the role of the Government of India in granting consent for State borrowings under Article 293. What are the potential benefits and challenges associated with this regulatory framework?”
Additional Insights:
- Balancing Autonomy and Oversight: Article 293 balances State autonomy in financial management with Union oversight, ensuring that borrowing practices do not compromise fiscal stability.
- Promoting Fiscal Responsibility: The article encourages States to adopt responsible borrowing practices and maintain financial discipline, contributing to the overall economic health of the country.
- Coordination Between Union and States: By requiring Union consent for additional borrowing, Article 293 fosters coordination between the Union and State governments in managing public debt.
Understanding Article 293 is crucial for UPSC aspirants as it provides insights into the mechanisms for regulating State borrowing, emphasizing the importance of fiscal responsibility and coordination between different levels of government. 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.