Article 293 - Borrowing by the States

Q.  Which article of the Indian Constitution deals with the Borrowings by State?
- Published on 19 Aug 16

a. 213
b. 296
c. 293
d. 282

ANSWER: 293
 
  • Article 293 (3) - A State may not without the consent of the Government of India raise any loan.
  • In the spirit of Co-operative federalism and in order to bring-in the transparency and predictability in the Open Market Borrowings (OMBs) by the States, the Central Government has decided to simplify the consent mechanism for OMBs under Article 293 (3) of the Constitution.
  • Till now, the States were required to obtain quarterly consent from the Central Government for raising OMBs within the Net Borrowing Ceiling (NBC) fixed for each of the States as per the formula prescribed by the Fourteenth Finance Commission (FFC).
  • The simplified procedure will ensure that consent under Article 293(3) is issued only on three occasions during the year, one in the month of April for first nine months after fixation of borrowing ceilings, second in the month of December for the first two months of the fourth quarter and last in the month of March after the assessment of actual borrowings by the States.

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