Q. With reference to financial relations between the Centre and States, consider the followings statements:
1. While the central government can borrow anywhere within India, the state governments can borrow only within the boundaries of the concerned state.
2. Normally a state cannot raise any loan without the consent of the centre.
3. The loans given to states by centre are charged on the consolidated fund of India.
How many of the above given statements are correct?
Answer: A
Notes:
Exp) Option a is the correct answer
The constitution of India lays down certain provisions with respect to the borrowing powers of the centre and the states.
Statement 1 is incorrect: While it is true that the centre government can raise money anywhere within the country or outside India, states can raise money anywhere within India.
Statement 2 is incorrect: Normally a state can raise a loan without the consent of the centre government. It is mandatory for states to take central government’s consent for raising any loan if the state owes any outstanding liabilities to the central government.
Statement 3 is correct: The loans granted by the Centre government to states is charged on the consolidated fund of India.
