Q. Regarding the borrowing powers under the Indian Constitution, consider the following statements:
1.The Central Government can borrow both within India and outside India upon the security of the Consolidated Fund of India, within limits fixed by Parliament.
2.A State Government can borrow only within India and not abroad, upon the security of the Consolidated Fund of the State.
3.A State cannot raise any loan without the consent of the Centre if there is still outstanding any part of a loan which has been made to the State by the Centre.
Which of the statements given above are correct?
Explanation:
Statement 1: Correct. Article 292 of the Indian Constitution empowers the central government to borrow money on the security of the Consolidated Fund of India, either within India or outside. This authority is subject to limitations set by Parliament, ensuring parliamentary oversight and financial discipline regarding national debt and guarantees.
Statement 2: Correct. Article 293(1) of the Indian Constitution authorizes state governments to borrow money within India, using their Consolidated Fund as security. This borrowing power is subject to limitations set by the state’s legislature, allowing states to manage debt for development while maintaining fiscal discipline.
Statement 3: Correct. Article 293(3) of the Indian Constitution stipulates that a State government cannot raise any loan without the consent of the Government of India if there is still outstanding any part of a previous loan made to the State by the Centre (or its predecessor) or in respect of which a guarantee has been given by the Union.
