Q. With reference to Constitutional provisions with regard to borrowing, consider the following statements:
1. Parliament can fix limits on the external borrowing that can be undertaken by the Central government.
2. A state government always requires consent of the Centre to raise loans within India.
Which of the statements given above is/are correct?
Answer: A
Notes:
Exp) Option a is the correct answer.
Statement 1 is correct. The Parliament under Article 292 can fix limits on both internal and external borrowing of the Central Government. However, no such law has so far been enacted by the Parliament.
Statement 2 is incorrect. Only when there is still outstanding part of a loan made to the state by the Centre or in respect of which a guarantee has been given by the Centre, the state would require consent of the Centre before raising any loan. If neither of the above situations exist, the state would not need the consent of the Centre.
