3.2 Since all the States are still indebted to Government of India, the constitutional position, therefore, is that prior consent of Government of India is necessary before a State Government raises a loan. Such prior consent is not necessary before the State government gives a guarantee. The State legislature is competent to limit the amount of guarantees which a State Government may give. It may be argued that guarantees are in the nature of a contingent liability which devolve on the State government in the event of default in repayment of loan; Article 293(3) may therefore, be stretched to extend to guarantees given by State governments. However, Article 293(1) specifically distinguishes between borrowing and guarantees. It would, therefore, be reasonable to conclude that ‘loan’ mentioned in Article 293(3) is intended to cover borrowing only and is not intended to apply to guarantees as well.
3.3 The constitutional position, therefore, would be that State governments do not require prior consent of Government of India before giving a guarantee. It is possible to suggest that Government of India, while giving permission to State governments to raise loans may satisfy itself about the extent of guarantees given by the State government and impose conditions thereon. In view, however, of the different constitutional provisions relating to States powers to raise finances and issue guarantees, such suggestions would need to be vetted by constitutional experts who could limit the interpretation of conditions to be only those related to the specific loan for which consent is given.
Reading this it seems like since state entities are not covered by Article 293, they have been given permission to raise external borrowings. State is just acting as a guarantor. Thus, no violation of Article 293.
Also, read 3.10(e) from the link given below.
https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=17
Is there a need of prior notice for raising a matter in zero hour?
While an Indian express article says it is not needed, Lok Sabha FAQs say a notice is required. Any clarification on this would be helpful.
http://164.100.47.194/loksabha/FAQ.aspx
