Para 10.11 — MSO (A&E)
Original Rule Text
10.11 Borrowings.-Under Article 292 of the Constitution, the Union can raise money by borrowing upon the security of the Consolidated Fund of India within such limits, if any, as may from time to time be fixed by Act of Parliament. Under Article 293 of the Constitution, a State may borrow within the territory of India upon the security of the Consolidated Fund of the State within such limits, if any, as may from time to time, be fixed by the Act of the Legislature of the State subject to the condition that a State may not, without the consent of the Government of India, raise any loan if there is still outstanding any part of a loan made to the State by the Government of India or by its predecessor Government, or in respect of which a guarantee has been given by the Government of India or by its predecessor Government. A State Government may also obtain loans from the Government of India Subject to such conditions as may be laid down by or under any law made by Parliament. It is an important duty of the Accountant General (Accounts & Entitlement) to see that borrowings of a State Government are so regulated as not to exceed the limits fixed by the Legislature and that the conditions laid down by or under an
Act of Parliament are duly observed in respect of a loan granted by the Government of India to a State or guaranteed by it. In the case of loans raised by a State which can be done only within the territory of India or obtained by it from the Government of India, it should be watched that any conditions imposed by the latter Government in giving consent to raise a loan or in giving a guarantee in respect of a loan are duly complied with by the State Government.
What This Means
Government borrowings are governed by Articles 292 and 293 of the Constitution. The Union can borrow on the security of the Consolidated Fund of India within limits set by Parliament. States can borrow within India on the security of their Consolidated Fund, but need Central Government consent if they have outstanding central loans or guarantees. The Accountant General (A&E) has a critical duty to ensure State borrowings stay within legislative limits and that all conditions attached to central loans are properly observed.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Key Points
- 1Union borrowing: secured against Consolidated Fund of India, limits set by Parliament (Article 292)
- 2State borrowing: secured against State's Consolidated Fund, within limits set by State Legislature (Article 293)
- 3States need Central Government consent to borrow if they have outstanding central loans or guarantees
- 4AG (A&E) must monitor that borrowing limits are not exceeded
- 5Conditions attached to central loans and guarantees must be tracked and enforced
Practical Example
A State Government wants to raise Rs. 5,000 crore through market borrowing. The Accountant General checks whether the State has any outstanding loans from the Central Government. Finding that Rs. 2,000 crore in central loans is still outstanding, the AG verifies that the State has obtained consent from the Government of India before raising the new loan. The AG also checks whether the cumulative borrowing remains within the limit fixed by the State Legislature.
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.
Frequently Asked Questions
When does a State need Central Government permission to borrow?▼
What is the AG's role in monitoring State borrowings?▼
Can States borrow from outside India?▼
This explanation was generated with AI assistance for educational purposes. Always refer to the official gazette notification for authoritative text.