Borrowing by States
Article 293 — Borrowing by States
the executive power of a State extends to borrowing within the territory of India 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. (2) 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. (3) 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 by its predecessor Government, or in respect of which a guarantee has been given by the Government of India or by its predecessor Government. (4) A consent under clause (3) may be granted subject to such conditions, if any, as the Government of India may think fit to impose. CHAPTER III.—PROPERTY, CONTRACTS, RIGHTS, LIABILITIES, OBLIGATIONS AND SUITS
Plain English Summary
This article explains the rules for how a State government can borrow money. A State can borrow money within India, provided it follows specific rules set by its own legislature and gives guarantees as required. The Central Government also has the power to lend money or guarantee loans to States under certain conditions.
Key Points
- A State can borrow money within India if the Legislature of that State allows it and sets limits.
- The State must provide guarantees according to the rules set by its own law.
- The Central Government can make loans or give guarantees to a State, but this is subject to conditions made by Parliament.
- A State cannot take a new loan from the Central Government if it already has an outstanding loan or guarantee from the Central Government or its predecessor.
Why It Matters
This article establishes the financial framework for how states can manage their finances and access funds, ensuring that borrowing is done within constitutional limits and under central oversight.
Landmark Judgements
No major landmark judgements.